- 31 - IV. Fraud Penalty--Section 6663 Section 6663(a) provides that “If any part of any underpayment of tax required to be shown on a return is due to fraud, there shall be added to the tax an amount equal to 75 percent of the portion of the underpayment which is attributable to fraud.” The Commissioner bears the burden of proving fraud by clear and convincing evidence. Sec. 7454(a); Rule 142(b). The Commissioner cannot satisfy his burden of proving fraud by relying upon the taxpayer’s failure to establish error in the determination of deficiencies. Parks v. Commissioner, 94 T.C. at 660-661. To prove fraud, the Commissioner must establish that (1) an underpayment exists and (2) some portion of the underpayment is attributable to fraud. DiLeo v. Commissioner, 96 T.C. at 873. As stated supra, we find that respondent has clearly and convincingly proven that petitioner received and failed to report income from his farming business in 1990, 1991, and 1992. If the Commissioner proves that any portion of an underpayment of tax is attributable to fraud, the entire underpayment shall be treated as attributable to fraud, except that when the taxpayer establishes by a preponderance of the evidence that any portion of the underpayment was not attributable to fraud, the fraudPage: Previous 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 Next
Last modified: May 25, 2011