Meri R. and William R. Kaufman - Page 9

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          specifies that, if any portion of the underpayment is                       
          attributable to fraud, the entire underpayment is treated as                
          attributable thereto, except and to the extent that the taxpayer            
          establishes some part is not due to fraud.                                  
               Respondent bears the burden of proving the applicability of            
          the civil fraud penalty by clear and convincing evidence.  Sec.             
          7454(a); Rule 142(b).  To sustain this burden, respondent must              
          establish by this level of proof both (1) that there was an                 
          underpayment of tax for the taxable year in issue and (2) that at           
          least some portion of such underpayment was due to fraud.  DiLeo            
          v. Commissioner, 96 T.C. 858, 873 (1991), affd. 959 F.2d 16 (2d             
          Cir. 1992); Petzoldt v. Commissioner, supra at 699.  Again, it is           
          clear that deemed admissions are sufficient to satisfy                      
          respondent’s burden of proving fraud.  Marshall v. Commissioner,            
          supra at 272-273; Doncaster v. Commissioner, 77 T.C. 334, 337-338           
               Here, Ms. Kaufman is deemed to have admitted that she                  
          fraudulently and with intent to evade taxes omitted from her                
          returns $33,330.47, $57,095.06, and $76,574.76 of taxable income            
          for 1993, 1994, and 1995, respectively.  She further is deemed to           
          have admitted that the foregoing omissions of income resulted in            
          understatements of Federal income tax liabilities of $6,546,                
          $11,577, and $18,226 for the respective 1993 through 1995 years,            
          and that such understatements were fraudulent with intent to                

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