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Respondent has shown by clear and convincing evidence as to
each year in issue that: (1) Michael understated his plumbing
business Schedule C gross receipts; (2) this understatement
resulted in an underpayment of tax; and (3) some part of this
underpayment of tax was due to Michael’s fraud.
OPINION
I. Summary; Conclusions
Because of its impact on the rest of the case, we first deal
with the parties’ dispute as to whether each petitioner was
required to report on that petitioner’s separate Federal income
tax return in accordance with the splits ordinarily required by
Louisiana’s community property regime. We agree with petitioners
that they were not so required. Respondent conceded that, if we
so held, then Sandra had no deficiencies and no additions to tax;
that concession will be given effect in our decision.10
We then consider the fraud issue. We agree with respondent
that respondent has shown by clear and convincing evidence that
Michael has an underpayment of tax for each year and that part of
each year’s underpayment is due to Michael’s fraud. Our
redeterminations as to amounts agree largely, but not entirely,
with respondent’s determinations as modified by the parties’
stipulations and respondent’s concessions.
10 Sandra nevertheless remains a party in the instant case.
DeLucia v. Commissioner, 87 T.C. 804 (1986).
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