Harvey L. Hoover - Page 31

                                       - 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 fraud                









Page:  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