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Petitioners paid an annual percentage rate of 18.13 percent on at
least $5,000 of that amount. All of the cash advances were taken
before Michael bought the Metairie Court property, when,
according to Michael’s testimony, he had cash remaining in the
box. Petitioners have not provided, and we cannot discern, any
reasonable explanation for their willingness to pay high interest
rates on cash advances when they allegedly had a substantial cash
hoard.
Based on the foregoing indicia of fraud, we conclude that
respondent has proved by clear and convincing evidence that some
or all of the underpayments of tax that result from Michael’s
failure to report all of his plumbing business Schedule C gross
receipts were due to Michael’s fraud. We have so found.
We hold for respondent on this issue.
C. Amounts; Burdens of Proof
In parts II-A and II-B of this opinion, respondent had the
burden of proving, by clear and convincing evidence, that there
were underpayments of tax, some part of which was due to
Michael’s fraud; respondent carried this burden for each year in
issue.
(1) Under section 6663(b), the entire underpayment of tax
for each year is treated as attributable to fraud, “except with
respect to any portion of the underpayment which the taxpayer
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