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extent necessary to correct the mathematical errors discussed
above.6
With respect to the fraud penalty under section 6663(a) that
respondent determined against petitioner for each of its taxable
years 1990 and 1991, section 6663(a) imposes a penalty equal to
75 percent of the portion of any underpayment that is attribut-
able to fraud. For purposes of section 6663(a), if the Commis-
sioner of Internal Revenue (Commissioner) establishes that any
portion of an underpayment is attributable to fraud, the entire
underpayment is to be treated as attributable to fraud, except
with respect to any portion of the underpayment that the taxpayer
establishes by a preponderance of the evidence is not attribut-
able to fraud. Sec. 6663(b). In order for the fraud penalty to
apply, the Commissioner must prove by clear and convincing
evidence, sec. 7454(a); Rule 142(b), that an underpayment exists
and that some portion of such underpayment is attributable to
fraud. Niedringhaus v. Commissioner, 99 T.C. 202, 210 (1992).
To prove the existence of an underpayment, the Commissioner
may not rely on a taxpayer’s failure to carry his or her burden
of proof with respect to the underlying deficiency. Parks v.
Commissioner, 94 T.C. 654, 660-661 (1990); Petzoldt v. Commis-
5(...continued)
records for the years at issue “were discarded due to their age”.
6See supra note 4.
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