- 10 - reduced to $24,266; the 1999 deficiency of $119,278 was reduced to $87,662; and the 2000 deficiency of $75,531 was reduced to $56,572. Thus, the aggregate reduction in petitioner’s total tax due from the amount determined in the statutory notice of deficiency was $107,142. The submitted Forms 1040 tax returns for 1997 through 2000 assisted the tax resolution process by identifying claimed deductions subject to substantiation, but they were not free from material errors. For example, petitioner’s Form 1040, Schedule C for 2000 reflected gross income from DSG and its related entities of $61,655; the parties now agree the correct amount of gross income was $198,990.9 OPINION I. General Rules Section 6651(f) imposes an addition to tax of up to 75 percent of the amount of tax required to be shown on the tax return when the failure to file a Federal income tax return timely is due to fraud. In a case involving fraud, respondent bears the burden of proof of establishing fraud with clear and convincing evidence. Sec. 7454(a); Rule 142(b). There are two elements of fraud under the Code: (1) Existence of an underpayment and (2) fraudulent 9 The record does not contain petitioner’s Forms 1040 for 1997 through 1999.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
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