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of $7,500 that he claimed to have paid to Special Friends and
$54,000 that he paid to Davoli and Pekas were fraudulent. We
disagree. Petitioner’s conduct relating to the $7,500 and
$54,000 items was materially different from that relating to the
$16,500 and $471.45 items. Petitioner altered or caused to be
altered a document that he gave to Hughs to support his claim
that he paid $7,500 to Special Friends, and he misrepresented to
Hughs that Pekas and Davoli provided services for which he paid
$54,000. Petitioner took affirmative steps to conceal the truth
with respect to those deductions. In contrast, with respect to
petitioner’s deduction of $16,500 that TruGreen paid to Nelson,
respondent showed only that petitioner did not make that payment;
there was no accompanying intentionally misleading conduct.
Similarly, respondent has failed to show that the $471.45
deduction was fraudulent.
4. Conclusion
Respondent has proven by clear and convincing evidence that
petitioner is liable for the fraud penalty under section 6663 for
2000 with respect to the deficiency caused by the fact that
petitioner (a) fraudulently deducted $7,500 three times on
petitioners’ 2000 tax return although they never paid that amount
to Special Friends; and (b) fraudulently deducted $54,000 of loan
repayments to Davoli and Pekas as legal and professional fees.
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