-298-
1989 and the portions of those payments that constitute income
properly attributable to Kanter:123
Total payments
Year to THC Kanter
1981 $80,616 $80,616
1982 70,538 70,538
1983 80,325 80,325
1984 822,840 595,333
1985 1,514,882 1,287,375
1986 1,069,335 841,828
1987 132,323 132,323
1988 96,188 96,188
1989 42,322 42,322
Issue II. Whether Kanter and Ballard Are Liable for Additions to
Tax for Fraud
OPINION
Having determined the payments from The Five represented
income earned by Kanter, Ballard, and Lisle, we must review
respondent’s determinations that Kanter and Ballard are liable
for additions to tax for fraud.
In asserting that a taxpayer is liable for the addition to
tax for fraud, the Commissioner has the burden of proving, by
clear and convincing evidence, that some part of the underpayment
for each year at issue was due to fraud. Sec. 7454(a); Rule
142(b). Consequently, the Commissioner must establish (1) an
underpayment, and (2) that some part of the underpayment is due
123 Kanter’s total share of the $2,763,500 in payments that
Schaffel remitted to THC during 1984 to 1986 has been reduced to
$2,080,980 to account for the $682,520 that we conclude Kanter
transferred to Lisle (representing Lisle’s share of a portion of
the Schaffel payments) by way of FPC Subventure Partnership.
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