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1999 and 2000.24 Accordingly, the Court sustains respondent’s
determination on this issue.25
C. Section 6663 Penalty
In any case involving the issue of fraud with intent to
evade tax, respondent bears the burden of proof as to that issue.
Sec. 7454(a). The burden of proof must be carried by clear and
convincing evidence. Rule 142(b). Section 6663(a) imposes a
penalty of “an amount equal to 75 percent of the portion of the
underpayment which is attributable to fraud.” Section 6663(b)
specifies that if any portion of the underpayment is attributable
24The notice of deficiency apparently calculates
petitioners’ 1999 sec. 6651(a)(1) addition to tax based on an
Aug. 15, 2000, due date despite petitioners’ failure to
reasonably estimate their tax liability on their request for an
extension. The notice of deficiency calculates petitioners’ 2000
sec. 6651(a)(1) addition to tax based on an Oct. 15, 2001, due
date, respondent having granted petitioners’ second request for
an extension despite petitioners’ failure to reasonably estimate
their tax liability on their first request for an extension.
Respondent failed to raise these issues in his answer and only
subsequently raised them on brief.
25The Court sustains respondent’s determinations in the
notice of deficiency. See supra note 24. The Court notes that
because 25 percent is the maximum addition to tax allowed under
sec. 6651(a)(1), the validity of the extension request is moot
for petitioners’ 1999 taxable year (petitioners filed their 1999
return on Nov. 23, 2001, which is more than 15 months late using
an Aug. 15, 2000, due date and more than 19 months late using an
Apr. 15, 2000, due date). The Court concludes, based on
respondent’s granting petitioners’ second request for an
extension, respondent’s claim in the notice of deficiency, and
respondent’s failure to raise this issue before trial which may
have prejudiced petitioners, that petitioners are liable for only
a 10-percent sec. 6651(a)(1) addition to tax for their 2000
taxable year.
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