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burden of showing how much of the underpayment is not due to
fraud. Ishler v. Commissioner, T.C. Memo. 2002-79.77
A. Underpayment of Tax Required To Be Shown on a Return78
Under section 6653(c)(1), in effect for each of the tax
years at issue, an “underpayment” is defined as follows:
SEC. 6653(c). Definition of Underpayment.–For
purposes of this section, the term “underpayment”
means--
(1) Income, estate, gift, and certain excise
taxes.--In the case of a tax to which section 6211
(relating to income, estate, gift, and certain
excise taxes) is applicable, a deficiency as
defined in that section (except that, for this
purpose, the tax shown on a return referred to in
section 6211(a)(1)(A) shall be taken into account
only if such return was filed on or before the
last day prescribed for the filing of such return,
determined with regard to any extension of time
for such filing) * * *
The Commissioner cannot rely upon the taxpayer’s failure to meet
the burden of proof on the issue of the existence of a deficiency
to sustain his burden of proving an underpayment by clear and
convincing evidence. Parks v. Commissioner, 94 T.C. at 660-661;
Otsuki v. Commissioner, 53 T.C. 96, 106 (1969).79 However, the
77See also Hughes v. Commissioner, T.C. Memo. 1994-139
(describing sec. 6653(b)(2) as a burden-shifting provision).
Sec. 6653(b)(2) was added to the Code by the Tax Reform Act of
1986, Pub. L. 99-514, sec. 1503(b), 100 Stat. 2742, and is
effective for return due dates after Dec. 31, 1986.
78Our discussions in subs. A and B do not address fraudulent
underpayments under sec. 6653(b)(2) for the 1985 tax year. That
addition is discussed separately in subs. C, infra.
79See appendix D for the items of income that respondent
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