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Respondent has the burden of proving by clear and convincing
evidence that petitioner (1) underpaid his tax each year in
issue, and (2) that some part of his underpayment was due to
fraud. Sec. 6663(a); see Parks v. Commissioner, 94 T.C. 654,
660-661 (1990).
Regarding whether an underpayment of tax exists for the
years in issue, petitioners stipulated that they understated
taxable income from petitioner’s law practice by overstating
business expenses for his 1989, 1990, 1991, 1992, and 1993
taxable years. Indeed, for the years in issue, petitioners’
final amended returns reported far more tax than reported on
their original returns.
Each amended Federal income tax return which reports more
income than the originally filed return is an admission of
underpayment of tax on the original return. See Badaracco v.
Commissioner, 464 U.S. 386, 399 (1984); Delvecchio v.
Commissioner, T.C. Memo. 2001-130; see also Tandon v.
Commissioner, T.C. Memo. 1998-66; Kalo v. Commissioner, T.C.
3(...continued)
fraud of such spouse.
4The Tax Reform Act of 1986, Pub. L. 99-514, sec. 1503(a),
100 Stat. 2085, 2742, amended sec. 6653(b) to increase the
addition to tax for fraud from 50 percent to 75 percent. The
Omnibus Budget Reconciliation Act of 1989, Pub. L. 101-239, sec.
7721, 103 Stat. 2395, removed the addition to tax for fraud from
sec. 6653(b) and replaced it with sec. 6663. We note that
petitioner’s 1989 Federal income tax was due after the effective
date of sec. 6663(a), Dec. 31, 1989, and therefore all
calculations are made pursuant to sec. 6663(a).
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