Alber I. and Georgette H. Said - Page 9

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          larger than that allowed by respondent.  At trial, petitioner               
          offered oral testimony unsubstantiated by documentary evidence to           
          demonstrate additional costs.  See Hradesky v. Commissioner, 65             
          T.C. 87, 90 (1975), affd. 540 F.2d 821 (5th Cir. 1976).  Even the           
          oral testimony was not specific in identifying additional                   
          amounts.  On brief, petitioners argue that Pascual miscalculated            
          amounts for all 3 years and that petitioners owe no tax.  The               
          calculations provided in petitioners’ brief are not supported by            
          evidence in the record.  Petitioner’s claim that he had no                  
          taxable income is not credible in the circumstances.  He is                 
          entitled to no costs of goods sold or deductions beyond those               
          conceded by respondent.                                                     
          Fraud Penalty                                                               
               The penalty in the case of fraud is a civil sanction                   
          provided primarily as a safeguard for the protection of the                 
          revenue and to reimburse the Government for the heavy expense of            
          investigation and the loss resulting from the taxpayer’s fraud.             
          Helvering v. Mitchell, 303 U.S. 391, 401 (1938); Sadler v.                  
          Commissioner, 113 T.C. 99, 102 (1999).  Respondent has the burden           
          of proving, by clear and convincing evidence, an underpayment for           
          the years in issue and that some part of the underpayment for               
          those years was due to fraud.  Sec. 7454(a); Rule 142(b).  If               
          respondent establishes that any portion of the underpayment is              
          attributable to fraud, the entire underpayment is treated as                






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