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We conclude that petitioners’ marriage contract was
effective during the years in issue.
We hold for petitioners on this issue.
III. Fraud
Respondent contends (1) that Michael underpaid his taxes for
each year in issue, and (2) that all or part of his underpayments
are due to fraud, and, thus, Michael is liable for the fraud
penalties under section 6663.
Petitioners acknowledge that Michael may have underpaid his
taxes for each year in issue, but maintain that any underpayment
was not due to fraud because Michael lacked the requisite
fraudulent intent.
We agree with respondent.
When respondent seeks to impose the penalty under section
6663,21 respondent has the burden of proof. To carry this
21 SEC. 6663. IMPOSITION OF FRAUD PENALTY
(a) Imposition of Penalty.-- 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.
(b) Determination of Portion Attributable to Fraud.--
If the Secretary establishes that any portion of an
underpayment is attributable to fraud, the entire
underpayment shall be treated as attributable to fraud,
except with respect to any portion of the underpayment which
the taxpayer establishes (by a preponderance of the
evidence) is not attributable to fraud.
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