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dealings in cash. We consider these badges as appropriate in
deciding whether Vortex and the Zhadanovs are liable for the
fraud penalty for any of the years at issue.
III. Vortex Issues
A. The Fraud Penalty Against Vortex for FYEs 1991
and 1992
1. The Underpayment Requirement
Respondent asserts Vortex fraudulently underreported its
income for FYEs 1991 and 1992, and fraudulently failed to file a
tax return for FYE 1993. Vortex concedes that it did not include
cash receipts from vial sales in gross income for FYEs 1991,
1992, and 1993, but disputes that its omission of income for FYEs
1991 and 1992, and its failure to timely file its Federal income
tax return for FYE 1993 were fraudulent.
2. The Underpayment Due to Fraud Requirement
Respondent determined petitioners were liable for additions
to tax and penalties for FYEs 1991 and 1992 under section 6663,
which provides: “If any part of any underpayment of tax required
to be shown on a return is due to fraud, there shall be added to
the tax an amount equal to 75 percent of the portion of the
underpayment which is attributable to fraud.”
In deciding whether a corporation has acted fraudulently, we
examine the actions of the corporation’s officers. DiLeo v.
Commissioner, supra at 874; Kahrahb Rest., Inc. v. Commissioner,
T.C. Memo. 1992-263 (“A corporation can act only through
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