- 40 -
We find that respondent has produced substantial evidence
demonstrating that petitioner received unreported income.
Delaney v. Commissioner, 743 F.2d 670, 671 (9th Cir. 1984), affg.
T.C. Memo. 1982-666; see Bradford v. Commissioner, 796 F.2d 303,
305 (9th Cir. 1986), affg. T.C. Memo. 1984-601. Furthermore, we
find that petitioner has failed to establish by a preponderance
of the evidence that respondent’s determinations were arbitrary
or erroneous. Rapp v. Commissioner, 774 F.2d 932, 935 (9th Cir.
1985), Larsen v. Commissioner, 765 F.2d 939, 941 (9th Cir. 1985);
Delaney v. Commissioner, supra at 671. Accordingly, we sustain,
subject to the aforesaid50 and the concessions of the parties,
respondent’s deficiency determinations for the years herein at
issue.
B. Fraud Penalties
The Commissioner bears the burden of proving by clear and
convincing evidence that an “underpayment exists for the years in
issue and that some portion of the underpayment is due to fraud.”
Temple v. Commissioner, T.C. Memo. 2000-337 (citing sec. 7454(a),
Rule 142(b); Niedringhaus v. Commissioner, 99 T.C. at 210), affd.
62 Fed. Appx. 605 (6th Cir. 2003); see Baumgardner v.
Commissioner, 251 F.2d 311 (9th Cir. 1957), affg. T.C. Memo.
50As previously stated, the computation under Rule 155 shall
evidence that petitioner was owed $7,500 from Newark Wreckers.
See supra page 26.
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