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6653(b)(1)(A) and (B) applies to the 1986 and 1987 liabilities.15
“Fraud is established by proving that the taxpayer intended
to evade tax believed to be owing by conduct intended to conceal,
mislead, or otherwise prevent the collection of such tax.”
Recklitis v. Commissioner, 91 T.C. 874, 909 (1988). The presence
of fraud is not presumed, and the Commissioner bears the burden
of proving fraud by clear and convincing evidence. Sec. 7454(a);
Rule 142(b); Beaver v. Commissioner, 55 T.C. 85, 92 (1970). The
existence of fraud is a factual question resolved by an
examination of the entire record. DiLeo v. Commissioner, 96 T.C.
at 874. In order for the Commissioner to prove fraud by clear
and convincing evidence, the Commissioner must establish for each
year at issue that (1) the taxpayer underpaid his taxes, and (2)
some part of the underpayment is attributable to fraud.16 Id. at
886. The Commissioner may establish fraud by circumstantial
15The 1986 amendments apply to returns due after Dec. 31,
1986. TRA sec. 1503(e), 100 Stat. 2743.
16For purposes of the sec. 6653(b)(1) additions to tax for
1982 through 1985, the Commissioner must prove that a portion of
the underpayment in each year is due to fraud, but for purposes
of the sec. 6653(b)(2) additions to tax for 1982 through 1985,
the Commissioner must prove the specific portion of each year’s
underpayment that is due to fraud. DiLeo v. Commissioner, 96
T.C. 858, 873 (1991), affd. 959 F.2d 16 (2d Cir. 1992). For
purposes of the sec. 6653(b)(1)(A) and (B) additions to tax for
1986 and 1987, if the Commissioner proves that any portion of the
underpayment for a year is attributable to fraud, the entire
underpayment for that year is treated as attributable to fraud,
except with respect to any portions of the underpayment that the
taxpayer establishes are not attributable to fraud. Sec.
6653(b)(2).
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Last modified: May 25, 2011