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of Trompeter v. Commissioner, 111 T.C. 57, 58 (1998). An
underpayment under sections 6663 and 6664(a) has the same meaning
as a deficiency in section 6211(a).
To prove fraud respondent has presented evidence of and
relied on Regal’s conduct with respect to the omitted gross
receipts from sales of wheels and axles. However, as a result of
the corresponding deductions determined and allowed, these
adjustments do not result in underpayments of tax. The
underpayments of tax come from other items (i.e., the denied bad
debt deduction, the denied deductions for State sales taxes, and
unreported volume rebate income).
To prove fraud under section 6663(b), respondent is required
to prove by clear and convincing evidence that a part of the
underpayment for each year is attributable to fraud. Respondent
has not clearly and convincingly proven that any part of the
underpayment of tax due from Regal for the tax years ending
March 31, 1992 and 1993, is attributable to fraud. See Kreimer
v. Commissioner, T.C. Memo. 1983-672. Accordingly, we conclude
that Regal is not liable for the fraud penalties under section
6663.
We now consider whether Mr. Coyle is liable for the fraud
penalties. On the basis of our discussion above, we are
satisfied that there is an underpayment of tax with respect to
commission income required to be shown on each of Mr. Coyle’s
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