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deductions resulted in $156,961 of additional income that was to
be reported $52,321 by Mr. Perry, $52,320 by Mr. Rosenthal, and
$52,320 by Mr. Feinsmith. Randy Hall attached to that second
amended return the affidavits of Messrs. Feinsmith, Rosenthal,
and Perry, which read virtually verbatim. The affidavit of Mr.
Feinsmith was the one that he attached to his second amended
return for 1984.4
OPINION
We decide whether the estate is liable for the additions to
tax for fraud determined by respondent. Respondent must prove
this determination by clear and convincing evidence. Sec.
7454(a); Rule 142(b); Rowlee v. Commissioner, 80 T.C. 1111, 1113
(1983). Fraud requires a showing that the taxpayer intended to
evade a tax known or believed to be owing. Stoltzfus v. United
States, 398 F.2d 1002, 1004 (3d Cir. 1968). Here, respondent
must prove: (1) Mr. Feinsmith underpaid his taxes for each of
the subject years and (2) some part of each underpayment was due
to fraud. Respondent must also prove for purposes of section
6653(b)(2) the portion of the underpayments attributable to
fraud. See sec. 6653(b)(2); see also Cooney v. Commissioner,
T.C. Memo. 1994-50.
4 The parties agree that Randy Hall’s second amended return
overstated by $17,362.80 its income for the fiscal year ended
Jan. 31, 1984, and that Mr. Feinsmith's 1984 income from the
scheme should be reduced by $5,787.60.
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