Darrell L. Gaines - Page 19

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          The Commissioner bears the burden of proof with respect to the              
          imposition of the fraud penalty for each year.  Sec. 7454(a);               
          Rule 142(b).  The Commissioner must establish by clear and                  
          convincing evidence:  (1) There is an underpayment of tax; and              
          (2) some part of the underpayment of tax is due to fraud.                   
          Bradford v. Commissioner, 796 F.2d 303, 307 (9th Cir. 1986),                
          affg. T.C. Memo. 1984-601; Powell v. Granquist, 252 F.2d 56, 60-            
          61 (9th Cir. 1958); Hebrank v. Commissioner, 81 T.C. 640, 642               
          (1983).  If the Commissioner establishes that any portion of an             
          underpayment is attributable to fraud, then the entire                      
          underpayment is treated as being attributable to fraud, except              
          with respect to any portion of the underpayment which the                   
          taxpayer establishes by a preponderance of evidence is not                  
          attributable to fraud.  Sec. 6663(b).                                       
               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).  However, the                    
          Commissioner need not prove the precise amount of the                       
          underpayment, but only that an underpayment exists.  Niedringhaus           
          v. Commissioner, 99 T.C. 202, 210 (1992); Petzoldt v.                       
          Commissioner, 92 T.C. 661, 699-700 (1989).                                  
               The amended return filed for each year in issue in this case           
          demonstrates that petitioner underpaid his tax on the original              






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