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business deductions, that failure, on this record, does not rise
to the level of being fraudulent.
Accordingly, we hold that respondent has failed to show by
clear and convincing evidence that petitioner is liable for the
75-percent fraud penalty under section 6663(a).
IV. Is Petitioner Liable for the Failure to File Penalty for
Taxable Year 1991?
Section 6651(a)(1) provides for an addition to tax of 5
percent of the tax required to be shown on a return for each
month or fraction thereof for which there is a failure to file,
not to exceed 25 percent. A taxpayer may avoid this addition to
tax if it can be shown (1) that the failure did not result from
willful neglect, and (2) that the failure was due to reasonable
cause. See United States v. Boyle, 469 U.S. 241, 245 (1985).
Here, petitioner does not deny that he failed to file his
1991 income tax return until 1994. The circumstances in which
petitioner found himself when the 1991 return was due (April 15,
1992) were precarious; i.e., petitioner had been indicted for
Medicaid fraud and he had failed to report his business income in
returns filed for 1989 and 1990. Accordingly, although
petitioner has provided a reason for intentionally failing to
file, he has not provided a reason for which his failure to file
can be excused.
Accordingly, we hold that petitioner is liable for a 25
percent section 6651 addition to tax for 1991.
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