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to do so could result in a violation of the plea agreement and a
harsher sentence for Mr. Zhadanov.
Our review of the record leaves us unconvinced that Vortex
fraudulently failed to file its FYE 1993 return. The record
leaves us instead with the impression that Vortex’s failure to
file its return was due to other circumstances such as the
seizure of necessary records, and the arrest and imprisonment of
Vortex’s sole shareholder/president. Because respondent has the
burden of proving that Vortex fraudulently failed to file its
return by clear and convincing evidence, the unconvincing nature
of the record is fatal to respondent’s claim. Accordingly, we do
not sustain respondent’s determination of the section 6651(f)
penalty for FYE 1993.
C. The Delinquency Penalty Against Vortex for FYE 1993
Alternatively, respondent determined that Vortex was liable
for the addition to tax pursuant to section 6651(a) should we
find that Vortex’s failure to file was not due to fraud. Vortex
bears the burden of proof on this issue.15 Rule 142(a); Lee v.
Commissioner, 227 F.2d 181, 184 (5th Cir. 1955), affg. a
Memorandum Opinion of this Court; BJR Corp. v. Commissioner, 67
T.C. 111, 131 (1976).
15The burden of proof provisions of sec. 7491 do not apply
here because the examination in this case began before July 22,
1998. See Internal Revenue Service Restructuring & Reform Act of
1998, Pub. L. 105-206, sec. 3001, 112 Stat. 726.
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