- 21 - C. Whether Petitioner Is Liable for Fraud Under Section 6663(a) 1. Background Respondent contends that petitioner is liable for the penalty for fraud under section 6663(a) for 1993-95. Fraud is actual, intentional wrongdoing designed to evade a tax believed to be owing. Webb v. Commissioner, 394 F.2d 366, 377 (5th Cir. 1968), affg. T.C. Memo. 1966-81. To prevail, the Commissioner must prove by clear and convincing evidence: (a) Petitioner underpaid tax for each year in issue, and (b) some part of the underpayment is due to fraud. Secs. 6663(b), 7454(a); Rule 142(b); Parks v. Commissioner, 94 T.C. at 660-661; Petzoldt v. Commissioner, 92 T.C. 661, 699 (1989). If respondent shows that any part of an underpayment is due to fraud, the entire underpayment is treated as due to fraud unless the taxpayer shows by a preponderance of the evidence that part of the underpayment is not due to fraud. Sec. 6663(b). The fact that petitioner failed to meet his burden of proof on the underlying deficiencies in this case does not relieve respondent of the burden to prove, by clear and convincing evidence, both elements of fraud. Fairchild v. United States, 240 F.2d 944, 947 (5th Cir. 1957); Olinger v. Commissioner, 234 F.2d 823 (5th Cir. 1956), affg. in part and revg. in part T.C. Memo. 1955-9; Drieborg v. Commissioner, 225 F.2d 216, 218 (6thPage: Previous 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Next
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