- 14 -
during the investigation. Additionally, petitioner did not
conduct his dealings with CNC in cash. These factors might
mitigate against a finding of fraud were it not for the more
compelling factors establishing fraud outlined above.
Therefore, we conclude that respondent has clearly and
convincingly proven that at least some portion of the
underpayment of tax for the 1992 and 1993 tax years was due to
fraud. Most revealing in this regard are the admissions
petitioner made during his plea hearing. Petitioner has not
introduced cogent evidence to support his claim that the entire
underpayment is not attributable to fraud. Therefore, we sustain
respondent’s determination that petitioner is liable for
penalties for fraud under section 6663 for the 1992 and 1993 tax
years.
III. Conclusion
Based on the foregoing, we hold that petitioner is liable
for penalties for fraud under section 6663 for the years at
issue. Because section 6663 applies, we need not address
respondent’s alternative argument under section 6662(a).
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