§6663 — Imposition of fraud penalty

485, 492–93 (2017), supplementing and overruling in part 147 T.C.

485, 493 (2017), supplementing and overruling in part 147 T.C.

485, 494–98 (2017), supplementing and overruling in part 147 T.C.

485, 492–93 (2017), supplementing and overruling in part Graev v.

485, 492–93 (2017), supplementing and overruling in part 147 T.C.

485 (2017), supplementing and overruling in part 147 T.C.

35 [*35] (Holmes, J., concurring in result), supplementing and overruling in part 147 T.C.

485, 492-493 (2017), supplementing and overruling in p_gt 147 T.C.

485, 493 (2017), supplementing and overruling in part 147 T.C.

485, 493 (2017), supplementing and overruling in part 147 T.C.

485, 493 (2017), supplementing and overruling in part 147 T.C.

485 (2017), supplementing and overruling in part 147 T.C.

485 (2017), supplementing and overruling in part 147 T.C.

485, 493 (2017), supplementing and overruling in part 147 T.C.

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20, 2017), supplementing - 12 - [*12] and overruling in part 147 T.C.

Section 6663 Civil Fraud Penalties Section 6663(a) imposes a penalty equal to 75% of an underpayment of tax if any part of the underpayment is due to fraud. Once the Commissioner establishes that part of an underpayment is due to fraud, the entire underpayment is treated as “attributable to fraud,” except to the extent the taxpayer establishes that some part is not. See § 6663(b). This section does not apply with respect to a spouse filing a joint return unless some part of the underpayment is d

Unlike the section 6663 fraud penalty, the accuracy-related penalty requires the Commissioner to carry the burden of production but not the burden of proof with respect to the accuracy-related penalty.

Therefore, the section 6663 civil fraud penalty is inapplicable in this case.

Fraudulent Intent Section 6663 imposes a penalty of 75% of an underpayment of tax if any part of the underpayment is due to fraud. Once the Commissioner establishes that part of an underpayment is due to fraud, the entire underpayment is treated as “attributable to fraud,” except to the extent the taxpayer establishes that some part is not. § 6663(b). This section does not apply with respect to a spouse filing a joint return unless some part of the underpayment is due to the fraud of the spouse.

The revenue agent proposed section 6663 penalties in examination reports that were mailed to the Di Giorgios (on June 15, 2011) with 30-day letters signed by the revenue agent’s immediate supervisor. In Clay, we held that an examination report that is attached to a 30-day letter and proposes section 6663 penalties can embody the initial determination. Id. at 249. 4 Section 6751(b)(2) provides that the general rule of section 6751(b)(1) does not apply to any addition to tax under section 6651.

The Court concludes that section 7491(a) does not apply here because petitioners have not produced any evidence that they have satisfied the preconditions for its application.

6663(c). In her petition Mrs. Harrington challenged the negligence penalties determined by respondent and also requested relief from joint and several liability under section 6015(b) and (e). The latter request was forwarded for consideration by respondent’s centralized office, the Cincinnati Centralized Innocent Spouse Operation. 3The notice of deficiency stated that, “to the extent that it is determined that fraud does not apply to any portion of the underpayment, you are liable for an accurac

6663(b). Fraud is the intentional wrongdoing ofa taxpayerto evade tax believed to be owing. See Petzoldt v. Commissioner, 92 T.C. at 698. Fraud is never imputed or presumed. Parks v. Commissioner, 94 T.C. 654, 660 (1990). The existence of fraud is a question offact to be resolved upon consideration ofthe entire record. I1; Gajewski v. Commissioner, 67 T.C. 181, 199 (1976), aff'd without published opinion, 578 F.2d 1383 (8th Cir. 1978). In the case ofajoint tax return, section 6663 does not apply

In the case ofajoint return, the section 6663 penalty does not apply with respect to a spouse unless some part ofthe underpayment is due to the fraud ofsuch spouse.

- 23 - [*23] Accordingly, petitioner is liable for the section 6663 fraud penalties for all ofthe years at issue. III. Reasonable Cause We now turn to the reasonable cause defense. The fraud penalty does not apply to any portion ofan underpayment ifa taxpayer shows that there was reasonable cause for, and that the taxpayer acted in good faith with respect to, that portion.

This is an error in form only and does not have a substantive effect on these cases." Id., 1999 WL 482626, - 18 - [*18] at *1 n.2 (emphasis added).5 Because one might conclude from some ofour cases addressing section 6651(f) that we do not distinguish between what must be proved to sustain a section 6651(f) addition and what must be proved to sustain a section 6663(a) penalty, we do not find that, with respect to 2007, respondent failed to plead or to raise a section 6651(f) addition.

Petitioners suggest that these cases are distinguishable from the Cole cases. The most obvious distinction is that Scott C. Cole and his brother and law partner Darren T. Cole were penalized under section 6663 for fraud in their cases, whereas only the accuracy-related penalty of section 6662 is disputed in these cases.

Petitioners suggest that these cases are distinguishable from the Cole cases. The most obvious distinction is that Scott C. Cole and his brother and law partner Darren T. Cole were penalized under section 6663 for fraud in their cases, whereas only the accuracy-related penalty of section 6662 is disputed in these cases.

Petitioners suggest that these cases are distinguishable from the Cole cases. The most obvious distinction is that Scott C. Cole and his brother and law partner Darren T. Cole were penalized under section 6663 for fraud in their cases, whereas only the accuracy-related penalty of section 6662 is disputed in these cases.

Petitioners suggest that these cases are distinguishable from the Cole cases. The most obvious distinction is that Scott C. Cole and his brother and law partner Darren T. Cole were penalized under section 6663 for fraud in their cases, whereas only the accuracy-related penalty of section 6662 is disputed in these cases.

Petitioners suggest that these cases are distinguishable from the Cole cases. The most obvious distinction is that Scott C. Cole and his brother and law partner Darren T. Cole were penalized under section 6663 for fraud in their cases, whereas only the accuracy-related penalty of section 6662 is disputed in these cases.

Petitioners suggest that these cases are distinguishable from the Cole cases. The most obvious distinction is that Scott C. Cole and his brother and law partner Darren T. Cole were penalized under section 6663 for fraud in their cases, whereas only the accuracy-related penalty of section 6662 is disputed in these cases.

Petitioners suggest that these cases are distinguishable from the Cole cases. The most obvious distinction is that Scott C. Cole and his brother and law partner Darren T. Cole were penalized under section 6663 for fraud in their cases, whereas only the accuracy-related penalty of section 6662 is disputed in these cases.

Petitioners suggest that these cases are distinguishable from the Cole cases. The most obvious distinction is that Scott C. Cole and his brother and law partner Darren T. Cole were penalized under section 6663 for fraud in their cases, whereas only the accuracy-related penalty of section 6662 is disputed in these cases.

Pursuant to section 6663(c), Mrs. Norris is not liable for the fraud penalties. She is, however, jointly and severally liable for any deficiencies in 1998 resulting from the findings and conclusions reached herein with respect to Mr. Norris. See sec. 6013 (d) (3). With respect to 1996, because the fraud penalty does not apply to either petitioner, respondent may not rely on section 6501(c) to extend the limitations period.

Year Deficiency 6651(a) (1) 6651(f) 6662(a) 6663 1997 $46,587 $11,647 --- --- $34,940 1998 62,094 --- 1$46,571 $12,419 --- The notice of deficiency states that if it is determined that the sec. 6651(f) addition to tax is inapplicable, the sec.

Schmidt and Drysdale were distinguishable from the OEL program as described in those materials, but those concerns did not amount to a conclusion that the program was a sham that could not withstand IRS scrutiny.

Burke no fraud penalty under section 6663(a) and no accuracy- related penalty under section 6662 was stated in that entry-- i .e ., "F8082 disclosure"--and that reason does not apply to the failure-to-pay addition .

The cases petitioner cites are inapposite, however .

We express no opinion about the scope or validity of any of the consent forms.

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.” Moreover, if the Commissioner establishes that some part of an underpayment was due 14 It is unclear whether SPI, Inc., borrowed from Solarcom the amounts it was to spend for the equipment that it was to sell to, and then lease back from, Solarcom.

We therefore need not decide other issues relating to the deficiencies and additions to tax because the limitations period for assessmenthas expired.

However, for the reasons we explain below, we disagree with the Commissioner as to the applicability of the section 6663 fraud penalty.

Thus, the section 6676 penalty covers more taxpayer submissions to the IRS than the section 6662 and 6663 penalties, which are confined to returns.

We hold that the Commissioner has carried his burden of proving fraud by clear and convincing evidence.

As set forth in the FPAA, respondent also determined that a 75% civil fraud penalty pursuant to section 6663, a 40% gross valuation misstatement penalty pursuant to section 6662(h), and various alternative 20% penalties applied.2 OS timely filed a Petition on November 23, 2021, in response to the FPAA.

For the same reasons, we hold that this Court has jurisdiction to consider the imposition of additions to tax for failure to file under section 6651(a)(1), fraudulent failure to file under section 6651(f), failure to pay under section 6651(a)(2), and failure to make estimated tax payments under section 6654(a).

Then, we turn to the civil fraud penalties pursuant to section 6663.

We hold they did; 2.

MEMORANDUM FINDINGS OF FACT AND OPINION PARIS, Judge: By notice of deficiency dated March 31, 2010, respondent determined deficiencies in petitioners’ federal income tax and fraud penalties pursuant to section 66631 as follows: Year Deficiency § 6663 Penalty 1999 $72,896 $54,672.00 2000 92,891 69,668.25 1 Unless otherwise indicated, statutory references are to the Internal Revenue Code, Title 26 U.S.C.

Petitioner executed a closing agreement with the IRS for the 2008–11 taxable years which included an assessment of taxes due and civil fraud penalties pursuant to section 6663.

MEMORANDUM FINDINGS OF FACT AND OPINION ASHFORD, Judge: By statutory notice ofdeficiency dated April 27, 2012, respondent determined deficiencies in petitioners' Federal income tax and SERVED Jan 15 2020 -2- [*2] civil fraud penalties pursuant to section 6663(a)¹ for the 2005, 2006, 2007, and 2008 taxable years (years at issue) as follows: Penalty¹ Year Deficiency sec.

MEMORANDUM FINDINGS OF FACT AND OPINION ASHFORD, Judge: By statutorynotice ofdeficiency dated July 2, 2014, respondent determined deficiencies in petitioner's Federal income tax and civil SERVED Sep 10 2020 - 2 - [*2] fraud penalties pursuant to section 6663(a)¹ for the 1999 and 2000 taxable years (years at issue) as follows: Penalty Year Deficiency sec.

Consequently, we hold that for each year at issue Mr.

(SRI); we hold that they do; (2) whether petitioners and their wholly owned entities are entitled to the following deductions: a charitable contribution deduction in 2005 for the transfer ofreal property, a worthless debt deduction relating to Reddy Lab (described W or a worthless debt or stock deduction relating

The issues for consideration are: (1) whether Watchman's income is taxable to the Pudlos; we hold it is; (2) whetherthe statute oflimitations bars review of the partnership items or the assessment oftax against the Pudlos for any year at issue; we hold it does not; (3) whether the Pudlos are liable for section 6662(a) accuracy-related penalties; we hold they are not.

The issues for consideration are: (1) whether Watchman's income is taxable to the Pudlos; we hold it is; (2) whetherthe statute oflimitations bars review of the partnership items or the assessment oftax against the Pudlos for any year at issue; we hold it does not; (3) whether the Pudlos are liable for section 6662(a) accuracy-related penalties; we hold they are not.

(SRI); we hold that they do; (2) whether petitioners and their wholly owned entities are entitled to the following deductions: a charitable contribution deduction in 2005 for the transfer ofreal property, a worthless debt deduction relating to Reddy Lab (described W or a worthless debt or stock deduction relating

The issues for consideration are: (1) whether Watchman's income is taxable to the Pudlos; we hold it is; (2) whetherthe statute oflimitations bars review of the partnership items or the assessment oftax against the Pudlos for any year at issue; we hold it does not; (3) whether the Pudlos are liable for section 6662(a) accuracy-related penalties; we hold they are not.

(SRI); we hold that they do; (2) whether petitioners and their wholly owned entities are entitled to the following deductions: a charitable contribution deduction in 2005 for the transfer ofreal property, a worthless debt deduction relating to Reddy Lab (described W or a worthless debt or stock deduction relating

The issues for consideration are: (1) whether Watchman's income is taxable to the Pudlos; we hold it is; (2) whetherthe statute oflimitations bars review of the partnership items or the assessment oftax against the Pudlos for any year at issue; we hold it does not; (3) whether the Pudlos are liable for section 6662(a) accuracy-related penalties; we hold they are not.

The issues for consideration are: (1) whether Watchman's income is taxable to the Pudlos; we hold it is; (2) whetherthe statute oflimitations bars review of the partnership items or the assessment oftax against the Pudlos for any year at issue; we hold it does not; (3) whether the Pudlos are liable for section 6662(a) accuracy-related penalties; we hold they are not.

The issues for consideration are: (1) whether Watchman's income is taxable to the Pudlos; we hold it is; (2) whetherthe statute oflimitations bars review of the partnership items or the assessment oftax against the Pudlos for any year at issue; we hold it does not; (3) whether the Pudlos are liable for section 6662(a) accuracy-related penalties; we hold they are not.

(SRI); we hold that they do; (2) whether petitioners and their wholly owned entities are entitled to the following deductions: a charitable contribution deduction in 2005 for the transfer ofreal property, a worthless debt deduction relating to Reddy Lab (described W or a worthless debt or stock deduction relating

(SRI); we hold that they do; (2) whether petitioners and their wholly owned entities are entitled to the following deductions: a charitable contribution deduction in 2005 for the transfer ofreal property, a worthless debt deduction relating to Reddy Lab (described W or a worthless debt or stock deduction relating

We hold that petitioner had constructive dividends of$61,237.50 for 1999 and $20,789 for 2000.

The issues for consideration are: (1) whether Watchman's income is taxable to the Pudlos; we hold it is; (2) whetherthe statute oflimitations bars review of the partnership items or the assessment oftax against the Pudlos for any year at issue; we hold it does not; (3) whether the Pudlos are liable for section 6662(a) accuracy-related penalties; we hold they are not.

In relevant part, section 6663 provides: SEC.

The only issue for consideration is whether petitioners are liable for fraud penalties pursuant to section 6663 for tax years 1998 and 2002.

The only issue for consideration is whether petitioners are liable for fraud penalties pursuant to section 6663 for tax years 1998 and 2002.

MEMORANDUM OPINION GOEKE, Judge: The parties agree that there is a deficiency in income tax of $392,083 and a penalty pursuant to section 6663¹ of$294,062 for tax year 1998.

In applying the addition to tax under section 6651(f), we consider the same elements, or long-recognized "badges offraud", discussed in cases applying section 6663 or former section 6653(b)(1).

Accordingly, we hold that petitioner had taxable income resulting from $207,936 - 22 - [*22] offunds he diverted from the Capital Marketing account to purchase motorcycles and motorcycle-related accessories for the taxable year 2000.

Accordingly, to the extent that we sustain respondent's deficiency determinations, see supra part III.D-F, we hold that Mr.

In relevant part, section 6663 provides: SEC.

Accordingly, we hold that petitioner underreported his 2007 income by $806,739.33.

Accordingly, to the extent that we sustain respondent's deficiency determinations, see supra part III.D-F, we hold that Mr.

Therefore, we hold that she is liable for self-employmenttax.

We hold that he does.

We hold that it does not.

Accordingly, we hold that petitioner is liable for the tax deficiencies and - 18 - [*18] section 6663 civil fraud penalties for 2002-05, and for the section 6651(a)(1) late-filing additions to tax for 2002 and 2003.

We hold thatpetitioner was not.

We hold that he had deficiencies to the extent discussed below.

8-9.2 We hold that respondent's denial ofpetitioner's interest abatementrequest, other than as allowed in the notice ofdetermination, does not constitute an abuse ofdiscretion.

We hold that they are entitled to business mileage deductions only to the extentrespondenthas allowed in the notice ofdeficiency.8 III.

Simply put, petitioners made mistakes recording their expenditures, did not intend to evade tax, and are not liable for fraud penalties pursuant to section 6663.

Alexander are liable for fraud penalties pursuant to section 6663 for tie taxable years 1999 through 2002.

We hold that petitioners did fail to report certain income for all years at issue, but only to the extent stated herein; (2) whether any part ofany ofpetitioners' underpayments oftax for 1999 through 2003 was due to fraud, such that under section 6501(c) tax may be assessed at any time.

We hold that she is not entitled to the claimed deductions.

We hold that he did; (2) whether petitioner is entitled to net operating loss (NOL) deductions for the years at issue.

2In thÊ notice, respondent determined that petitioner omitted gross receipts (continued...) - 3 - (3) overstated his business deductions by $147,227, $197,739, and $183,762 for those years, respectively, and (4) is liable for the civil fraud penalty pursuant to section 6663(a) for each ofthose years.3 FINDINGS OF FACT Introduction Some facts are stipulated and are so found.

Accordingly, we hold that petitioner is liable for the addition to tax under section 6654 and sustain respondent's determination.

Accordingly, we hold thatpetitioner is liable for the section!6663 civil fraud penalties as determined by respondent.

Petitioner has failed to meet its burden." We hold that the entire underpayment for each of the years at issue is subject to the fraud penalty.

We hold that it does to the extent stated hereiù; (2) whether petitioners·omitted income ;of $5,668, $42,212, $107,089, $153,670, and $153,351, for 1984 through 1988, respectively.

In determining whether petitioner's underpayment was due to fraud, we apply long-recognized "badges of fraud", discussed in cases applying section 6663 or former section 6653 (b) (1).

We hold that he did; 1Unless otherwise indicated, all section references are to the Internal Revenue Code in effect for the years in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure.

In view of our conclusion that petitioner's failure to file was fraudulent, we do not consider that alternative.) In applying the addition to tax under section 6651(f), we consider the same elements, or long-recognized "badges of fraud", discussed in cases applying section 6663 or former section 6653 (b) (1).

MEMORANDUM FINDINGS OF FACT AND OPINION WELLS, Judge: Respondent determined income tax deficiencies of $37,594 and $18,769, and fraud-penalties pursuant to section 66631 of $28,195.50 and $14,076.75, for petitioners' 2005 and IUnless otherwise indicated, section references are to the (continued...) SERVED May312011 || - 2 - 2006 tax years, respectively.

Penalties Under Sections 6663 and 6662 If the fraud penalty under section 6663 applies to any portion of an underpayment, then the penalty under section 6662 will not apply to any portion of the underpayment on which the fraud penalty is imposed.

We hold that it does to the extent stated hereiù; (2) whether petitioners·omitted income ;of $5,668, $42,212, $107,089, $153,670, and $153,351, for 1984 through 1988, respectively.

We hold it did not; 2.

We hold that his liability is not limited to tax on the investment income paid to ALQI each year; rather, he is liable for tax on the entire net amount deposited into the ALQI accounts during each year in issue.

We hold that they did .

We hold that she is liable for the fraud penalty for each year but in amounts less than the IRS.

The issues for decision are (1) whether petitioner received unreported income totaling $35,792; (2) whether petitioner is liable for the fraud penalty pursuant to section 6663 with respect to the underpayment of tax or alternátively the accuracy- related penalty pursuant to section 6662; and (3) whether a penalty under section 6673 should be imposed against petitioner.

Accordingly, we hold the regulation to be valid.

Accordingly, we hold that respondent has not shown that petitioner is liable for the section 6663(a) penalty for 2005 .

Accordingly, we hold that, except for the wages paid to Mr .

Di Ricco (petitioner) is SERVED DEC 2 2 2009 - 2 - liable for the fraud penalty under section 6663 .1 The primary issue is whether respondent has proven by clear and convincing evidence that petitioner is' liable for the fraud penalty .2 We hold that he is not .

Enayat is=liable for additions to tax under section 6651(a)(1) for, the failure to timely file his tax returns for taxable years-1998 through 2001 .' We hold that-he is .

2002-234, 84 TCM (CCH) 321, 324 ("We hold that the doctrine .

Section 6663 provides : 1 - 8 - SEC .

303 250,727.25 2000 153,165 114,874.00 The issues we must decide are: (1) Whether petitioner has substantiated the existence or amounts of any foreign tax credits for the taxable years 1997, 1998, 1999, and 2000; (2) whether respondent has established that petitioner is liable for the fraud penalty pursuant to section 66631 for taxable years 1997, 1998, 1999, and 2000; and (3) whether petitioner has established that she is not liable, in the alternative, for a penalty pursuant to section 6662(a)

We hold that it should .

We hold that petitioner did not; accordingly, we also hold that petitioner did not overpay his income tax for 1989.

Conclusion We hold that petitioner is not liable for the fraud penalties under section 6663(a) but is liable for the accuracy- related penalties under section 6662(a) for negligence or intentional violation of rules or regulations for 1991 and 1992.

1963).] - 9 - We have also considered whether an estate may d~educt the items reported on its estate tax return, in order to determine its underpayment for purposes of applying section 6663(a), as well as any unreported item that is properly deductible as of the date that the estate tax return is filed.

candidate in public policy and administration at Walden University, a program which 2 In the alternative to the section 6663 fraud penalties, respondent determined that petitioner is liable for section 6662(a) accuracy-related penalties attributable to negligence, or a substantial understatement of income tax, for each of the years in issue.

NION GERBER, Judge: In a statutory notice of deficiency, mailed on May 4, 2001, respondent determined deficiencies in petitioner’s Federal income tax and penalties for the taxable years 1992, 1993, and 1994 as follows: - 2 - Penalty Year Deficiency Sec. 6663 1992 $4,831 $3,623.25 1993 12,115 9,086.25 1994 18,912 14,184.00 Petitioner contends that respondent is barred from assessing the income tax deficiencies because the notice of deficiency was mailed after the expiration of the 3-year period f

Section 6663 We first consider section 6663(a), which imposes a penalty “[i]f any part of any underpayment of tax required to be shown on a return is due to fraud.” That provision, like section 6501(c)(1), has its roots in the Revenue Act of 1918, ch. 18, 40 Stat. 1057, and contains no reference to the taxpayer. Ms. Murrin points out that the penal

29 [*29] 6751(b) procedural requirements for imposing section 6663 fraud penalties. Supervisory approval must occur before the first formal communication of the penalty to the taxpayer. Clay, 152 T.C. at 248– 50. The date of supervisory approval of the section 6663 fraud penalties was August 1, 2013. The supervisory approval took place before the sending of the 90-day letter, which was a formal communication of the penalty to the Bachners. The supervisory approval also took place before the send

The IRS also determined that petitioner was liable for employment taxes, fraud penalties under section 6663, and failure to deposit taxes penalties under section 6656 in the following amounts: 1Unless otherwise indicated, all section references are to the Internal Revenue Code of 1986, as amended and in effect for the relevant periods in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure.

MEMORANDUM FINDINGS OF FACT AND OPINION GOEKE, Judge: This case presents petitioner's challenge to respondent's fraud penalty determination under section 6663¹ for tax years 2001 through 2005 ¹Unless otherwise indicated, all section references are to the Internal Revenue Code in effect for the years at issue, and all Rule references are to the Tax Court Rules ofPractice and Procedure.

sioner, T.C. Memo. 2016-119; Alterman Tr. v. Commissioner, T.C. Memo. 2015-231. In their argument against imputed knowledge, petitioners cite Alexander v. Commissioner, T.C. Memo. 2013-203. The Alexander case involved the 75% penalty for fraud under section 6663. In Alexander we held that a taxpayer's limited understanding oftax laws and reliance upon his or her attorney is a factor weighing against the finding offraudulent intent for purposes ofthe 75% penalty. There is no legal basis to extend

sioner, T.C. Memo. 2016-119; Alterman Tr. v. Commissioner, T.C. Memo. 2015-231. In their argument against imputed knowledge, petitioners cite Alexander v. Commissioner, T.C. Memo. 2013-203. The Alexander case involved the 75% penalty for fraud under section 6663. In Alexander we held that a taxpayer's limited understanding oftax laws and reliance upon his or her attorney is a factor weighing against the finding offraudulent intent for purposes ofthe 75% penalty. There is no legal basis to extend

sioner, T.C. Memo. 2016-119; Alterman Tr. v. Commissioner, T.C. Memo. 2015-231. In their argument against imputed knowledge, petitioners cite Alexander v. Commissioner, T.C. Memo. 2013-203. The Alexander case involved the 75% penalty for fraud under section 6663. In Alexander we held that a taxpayer's limited understanding oftax laws and reliance upon his or her attorney is a factor weighing against the finding offraudulent intent for purposes ofthe 75% penalty. There is no legal basis to extend

sioner, T.C. Memo. 2016-119; Alterman Tr. v. Commissioner, T.C. Memo. 2015-231. In their argument against imputed knowledge, petitioners cite Alexander v. Commissioner, T.C. Memo. 2013-203. The Alexander case involved the 75% penalty for fraud under section 6663. In Alexander we held that a taxpayer's limited understanding oftax laws and reliance upon his or her attorney is a factor weighing against the finding offraudulent intent for purposes ofthe 75% penalty. There is no legal basis to extend

497, 526 — 543 (2010) (Gustafson, J., dissenting), I made a similar critique of this Court’s Opinion imposing the fraud penalty of section 6663; but in one respect the majority’s error in this case is more extreme: The outcome in Feller was supported by a regulation, i.e., 26 C.F.R.

January 19, 2012. 13303-07, 29011-08, 29090-08. R determined deficiencies in Ps' income.tax on the basis of his disallowance of the individual Ps' assignment of income to their personal service corporation. R also determined that Ps were liable for sec. 6663, I.R.C., fraud penalties, or, in the alternative, sec. 6662(a) accuracy- related penalties. Held: Ps are liable for portions of the deficiencies and sec. 6662(a) accuracy-related penalties in accordance with this opinion. 1Cases of the foll

January 19, 2012. 13303-07, 29011-08, 29090-08. R determined deficiencies in Ps' income.tax on the basis of his disallowance of the individual Ps' assignment of income to their personal service corporation. R also determined that Ps were liable for sec. 6663, I.R.C., fraud penalties, or, in the alternative, sec. 6662(a) accuracy- related penalties. Held: Ps are liable for portions of the deficiencies and sec. 6662(a) accuracy-related penalties in accordance with this opinion. 1Cases of the foll

January 19, 2012. 13303-07, 29011-08, 29090-08. R determined deficiencies in Ps' income.tax on the basis of his disallowance of the individual Ps' assignment of income to their personal service corporation. R also determined that Ps were liable for sec. 6663, I.R.C., fraud penalties, or, in the alternative, sec. 6662(a) accuracy- related penalties. Held: Ps are liable for portions of the deficiencies and sec. 6662(a) accuracy-related penalties in accordance with this opinion. 1Cases of the foll

Fraud PenaltV Section 6663(a) imposes. a 75-percent penalty on the portion of any underpayment of tax attributable to fraud. Section 6663 (b) provides that where the Commissioner establishes that any portion of an underpayment of tax is attributable to fraud, the entire underpayment is treated as.attributable to fraud except with respect to the portion of the underpayment that the taxpayer establishes, by a preponderance of the evidence, is not attributable to fraud. Section 6663 (c) specifies t

--- MAJORITY --- Haines, Judge: Rick D. Feller petitioned the Court for redetermination of the following penalties: Penalty Year sec. 6663 1992 . $78,481 1993 . 56,689 1994 . 43,566 1995 . 58,660 1996 . 59,963 1997 . 58,552 Hereafter, the years 1992, 1993, 1994, 1995, 1996, and 1997 will be referred to as the years at issue. After concessions, the issues for decision are: (1) Whether the issuance of the notice of deficiency for each of the years at issue is barred by the exp

- 4 - the full amount of the foreign earned income exclusion for 1999 ; (5) whether petitioner is liable for additions to tax under section 6651 (a)(1) for 1998 and 1999 ; (6) whether petitioner is liable for civil fraud penalties under section 6663 (a), or in the alternative, accuracy-related penalties under section 6662(a) for 1998, 1999 , 2000, 2001 , and 2002 ; (7) whether petitioner Annette Talmage is liable for the accuracy-related penalty under section 6662 (a) for 2002 ; and (8) whether

Wright is liable for the civil fraud penalty pursuant to section 6663 for his 1999, 2000, and 2001 taxable years ; (6) whether, in the alternative, if Mr .

MEMORANDUM FINDINGS OF FACT AND OPINION VASQUEZ, Judge : Respondent determined deficiencies and penalties with respect to petitioner's 1999, 2000, and 2001 Federal income tax as follows : SERVED JUN 2 6 2007 Penalties Year Deficiency Sec. 6662(a) ' Sec. 6663 1999 $45,969 .00 $2,434 .20 $25,348 .50 2000 42,401 .00 -- 31,778 .25 2001 38,393 .00 -- 28,761 .00 After concessions,2 the issues remaining for decision are : (1) Whether petitioner failed to report income from La Belle Vie, petitioner's na

The deficiency notice did not determine the fraud penalty under section 6663 against petitioner.

6663 1995 $79,701 -- $58,241.25 1998 22,412 $2,187.80 48,376.50 1999 55,578 190.00 1,166.25 - 2 - After trial, respondent filed a motion for leave to file amendment to answer asserting increased deficiencies as a result of petitioners’ failure to report $67,437 for 1995 and $87,942.76 for 1998 and additions to tax under section 6651(a)(1) and

OPINION RUWE, Judge: Respondent determined deficiencies in petitioner’s Federal income taxes and penalties pursuant to section 66631 as follows: 1Unless otherwise indicated, all section references are to (continued...) - 2 - Year Deficiency Penalty Sec. 6663 19901 $192,954 $144,715.50 1991 71,337 53,502.75 1992 56,075 42,056.25 1The notice of deficiency for 1990 states the amounts listed above. In his answer, respondent decreased the deficiency amount and fraud penalty for 1990 to $172,655 and $

xpired with respect to the tax years under consideration; and (12) whether the doctrine of double jeopardy, res judicata, or collateral estoppel bars assessment for any of the years at issue. 4 Pursuant to sec. 6664(b), the penalties for fraud under sec. 6663 and for negligence under sec. 6662 as determined in the notice of deficiency do not apply for 1989 because petitioner filed no return for that year. Rather the issue is whether the penalty under sec. 6651(f) for fraudulent failure to file i

xpired with respect to the tax years under consideration; and (12) whether the doctrine of double jeopardy, res judicata, or collateral estoppel bars assessment for any of the years at issue. 4 Pursuant to sec. 6664(b), the penalties for fraud under sec. 6663 and for negligence under sec. 6662 as determined in the notice of deficiency do not apply for 1989 because petitioner filed no return for that year. Rather the issue is whether the penalty under sec. 6651(f) for fraudulent failure to file i

April 16, 1998. Ramon Ortiz, pro se. Joanne B. Minsky, for respondent. MEMORANDUM FINDINGS OF FACT AND OPINION WRIGHT, Judge: Respondent determined deficiencies in petitioners' Federal income taxes and penalties as follows: Penalties Year Deficiency Sec. 6663 1991 $15,459 $11,594 1992 32,657 24,493 - 2 - In the alternative to the fraud penalties, respondent asserts in the answer to the petition that petitioners are liable for the accuracy-related penalties for 1991 and 1992 pursuant to section 6

ondent asserted further adjustments to petitioners' 1990 joint return, including: (1) An increase of $195,101 in the deficiency in income tax set forth in the original notice; and (2) an addition to tax of $373,731 under the civil fraud penalty of section 6663 or, alternatively, an increased penalty pursuant to section 6662(a) of $99,662.1 After concessions, two issues remain regarding petitioners' income tax liability for 1990: (1) Whether petitioners are liable for the penalty pursuant to sect

The definition of fraud for purposes of section 6501(c)(1) is the same as the definition of fraud for purposes of section 6663 (which imposes a penalty for fraud).

(9) Whether petitioner Bruno Tabbi is liable for the addition to tax for fraud under section 6653(b) for 1988 and the fraud penalty under section 6663 for 1989.

6663 1989 $90,116 -- $67,587 1990 2,541 $508 -- 1991 1,828 360 -- - 2 - After concessions by the parties, the issues for decision are: (1) Whether George Stotis (petitioner) recognized a taxable gain when he surrendered certain leasehold rights. We hold that he did. (2) Whether petitioner is liable for a penalty for fraud pursuant to section

For petitioner husband, the IRS determined deficiencies, fraud SERVED Jul 09 2019 - 2 - [*2] penalties under section 6663, and alternative accuracy-relatedpenalties under section 6662(a) as follows:¹ Penalties Year Deficiency Sec.

issues for decision are: (1) whether the notice ofdeficiency was issued after the period for assessment had expired; (2) whether the petitioners had unreported income of$141,810; and (3) whether the petitioners are liable for a fraud penalty under section 6663. We havejurisdiction, pursuant to section 6214, to redetermine the deficiency and the penalty determined in the notice ofdeficiency. See sec. 6214(a). FINDINGS OF FACT Some ofthe facts have been deemed admitted for purposes ofthis case in

e case ofa false or fraudulent return with the intent to evade tax, the tax may be assessed * * * at any time." The determination offraud for purposes ofsection 6501(c)(1) is the same as the determination offraud for the purposes ofthe penalty under section 6663. Neely v. Commissioner, 116 T.C. 79, 85 (2001). In the case ofincome tax deficiencies onjoint returns, proofoffraud against either spouse prevents the running ofthe period oflimitations as to both spouses. Vannaman v. Commissioner, 54 T.

In view of our conclusion that petitioner's failure to file was fraudulent, we do not consider that alternative.) In applying the addition to tax under section 6651(f), we consider the same elements, or long-recognized "badges of fraud", discussed in cases applying section 6663 or former section 6653 (b) (1).

jurisdiction to redetermine ! underpayments, that no underpayments exist, that P-H is not liable for fraud penalties, and that the deductions for State and local taxes are proper. Held: This Court has jurisdiction to redetermine the applicability of sec. 6663, I.R.C., penalties for fraud resulting from overstated withholding tax credits. Held, further, an "underpayment" includes a taxpayer's overstated credits for withholding under the rule in Feller v. Commissioner, 135 T.C. 497 .(2010) . ! SER

jurisdiction to redetermine ! underpayments, that no underpayments exist, that P-H is not liable for fraud penalties, and that the deductions for State and local taxes are proper. Held: This Court has jurisdiction to redetermine the applicability of sec. 6663, I.R.C., penalties for fraud resulting from overstated withholding tax credits. Held, further, an "underpayment" includes a taxpayer's overstated credits for withholding under the rule in Feller v. Commissioner, 135 T.C. 497 .(2010) . ! SER

Daoud had been altered, causing her to disallow the kitchen-equipment loss and apply a civil-fraud penalty under section 6663 for the amount of the deficiency attributable to the kitchen equipment loss, and accuracy-related penalties under section 6662 for the rest.

Section 861 Return as Fraud or Fraudulent Failure to File There are two different sections under which one can be penalized for fraud: section 6651(f) for a fraudulent failure to file, and section 6663 (a) for,an underpayment attributable to fraud.

Section 6663 Fraud Penalty We next consider whether petitioner is liable for the section 6663 fraud penalties . Fraud is an intentional wrongdoing on the part of the taxpayer with the specific purpose of evadin g a tax believed to . be owing . Edelson v . Commissioner , 829 F.2d 828, 833 (9th Cir . 1987), affg . T .C. Memo . 1986-223 ; Akland v . .

Section 6663,-to impose a civil- :fraud penalty as, a percentage of the tax that was evaded by fraudulent' means . As indicated in the Petition and .subsequent pleadings, the principal issue in this case is not that Mr . Williams doesn't owe taxes or penalties, but when the .taxes and penalties were incurred . This Court must make findings relating

), affd .' 519 F.2d 1121 (5th Cir . 1975) . The Commissioner has the burden of proving fraud by clear and convincing evidence . Sec . 7454(a) ; Rule 142(b) . The Commissioner's burden of proof under section 6501(c)(1) is the same as that imposed by section 6663 . See Pennybaker v . Commissioner, T .C . Memo . 1994-303 . To satisfy the burden of proof, the Commissioner must show : (1) An underpayment exists ; and (2) the taxpayer intended to evade taxes known to be owing by conduct intended to co

2001 $36,013 --- $27,010 2002 ~ 20,976 $5,244 15,732 2003 62,938 3,114 47,20 4 After a,settlement largely in respondent's favor of the income and expense adjustments determined in respondent's notices of deficiency, the issue for decision in these consolidated cases is whether Lowell Alan Baisden (petitioner) is liable„for the fraud penalty under section 6663 or alternatively for th e negligence penalty under section 6662(b)(1) .

petitioner. Michael D. Zima, for respondent. MEMORANDUM FINDINGS OF FACT AND OPINION WELLS, Judge: Respondent determined the following deficiencies in income tax and penalties for petitioner’s respective taxable years: - 2 - Penalty Year Deficiency Sec. 6663 1997 $320,441 $240,330.75 1998 400,372 300,279.00 1999 334,303 250,727.25 2000 153,165 114,874.00 The issues we must decide are: (1) Whether petitioner has substantiated the existence or amounts of any foreign tax credits for the taxable yea

The sole issue for decision is whether petitioner is liable for the section 6663 fraud SERVED NOV 2 6 2007 - 2 - penalty for 1994 .1 When the petition was filed, petitioner resided in Florida .

titled to certain itemized deductions for the years at issue ; (3) whether petitioner is entitled to a claimed Schedule E, Supplemental Income and Loss, rental expense deduction for 2001 ; (4) whether petitioner is liable for self-employment tax under section 1401 for 2001, 2002, and 2003; (5) whether petitioner is liable for fraud penalties under section 6663 for 2000, 2001, and 2002, or alternatively, accuracy-related penalties under section 1( .

-2- section 6663 for 1997 and 1998 (the years at issue).2 Respondent determined that petitioner Patricia B. Paterson (Mrs. Paterson) was liable for a $53,168 deficiency and a $39,876 fraud penalty for 1997. For 1998, respondent determined that Mrs. Paterson was liable for a $16,402 deficiency and a $12,301.50 fraud penalty. Respondent determined that p

6663 2000 $106,074 $79,555 .5 0 2001 74,841 56,130 .7 5 2002 74,156 55,617 .0 0 Unless otherwise indicated, all section references are to the Internal Revenue Code in effect for the years in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure . After concessions, the issues for decision are : (1) Whether petitio

dent. MEMORANDUM FINDINGS OF FACT AND OPINION WELLS, Judge: Respondent determined the following deficiencies in income tax and penalties for petitioners’ 1991 and 1992 taxable years: - 2 - Frank H. Black Year Deficiency Penalty sec. 6662(a) Penalty sec. 6663 1991 $22,904 n/a $17,178.00 1992 60,262 n/a 45,196.50 Marla C. Black Year Deficiency Penalty sec. 6662(a) Penalty sec. 6663 1991 $22,904 $4,580.80 n/a 1992 60,262 12,052.40 n/a After concessions, the issues we must decide are: (1) Whether pe

MEMORANDUM FINDINGS OF FACT AND OPINION COHEN, Judge: Respondent determined a deficiency of $1,205,548 and an addition to tax for fraud pursuant to section 6663 of $904,161 with respect to petitioners’ Federal income tax for 1997.

raud penalty pursuant to section 6651(f). In deciding whether a failure to file is fraudulent under section 6651(f), we consider the same elements that are considered in imposing the addition to tax for fraud under former section 6653(b) and present section 6663. Clayton v. Commissioner, 102 T.C. 632, 653 (1994). Fraud is defined as an intentional wrongdoing designed to evade tax believed to be owing. Powell v. Granquist, 252 F.2d 56 (9th Cir. 1958); Miller v. Commissioner, 94 T.C. 316, 332 (199

On August 20, 1999, respondent issued a notice of deficiency, which determined deficiencies and penalties with respect to petitioner’s Federal income taxes as follows: - 2 - Penalty Year Deficiency Section 6663 1989 $46,052 $34,539.00 1990 38,577 28,932.75 1991 52,452 39,339.00 1992 23,427 17,570.25 The issue for 1989 is whether petitioner has placed respondent’s deficiency determination in issue.

e to Ps, and liability for self- employment taxes. Held, further, Ps are not entitled to capital loss amounts claimed for both years and must recognize a capital gain in 1997. - 2 - Held, further, P H is liable for civil fraud penalties pursuant to sec. 6663, I.R.C., for 1996 and 1997. Held, further, P H is liable for an accuracy- related penalty pursuant to sec. 6662(a), I.R.C., with respect to that portion of the deficiency for 1996 that is not attributable to fraud. Held, further, the statute

t burden of proof, respondent must prove by a preponderance of the evidence that he properly disallowed petitioner’s Schedule A deductions, and he must also prove by clear and convincing evidence that petitioner is liable for the fraud penalty under section 6663. Rule 142. II. Substantiation of Schedule A Deductions A. Medical and Dental Expenses Section 213(a) authorizes a taxpayer, if he itemizes his deductions, to deduct expenses paid during the taxable year for 4Although a taxpayer may conte

The issues for decision are whether petitioner underreported his 1996 gross income by $1,551,863 and whether petitioner is liable for the section 6663 fraud penalty .

e to Ps, and liability for self- employment taxes. Held, further, Ps are not entitled to capital loss amounts claimed for both years and must recognize a capital gain in 1997. - 2 - Held, further, P H is liable for civil fraud penalties pursuant to sec. 6663, I.R.C., for 1996 and 1997. Held, further, P H is liable for an accuracy- related penalty pursuant to sec. 6662(a), I.R.C., with respect to that portion of the deficiency for 1996 that is not attributable to fraud. Held, further, the statute

6663 1999 $3,456 $691.20 -- 2000 46,341 4,094.60 1$19,401 2001 3,566 713.15 -- 1 Respondent determined that petitioner William S. Fairey, Jr., is liable for the penalty for fraud with respect to part of the underpayment and that both petitioners are liable for the negligence penalty with respect to the remainder of the underpayment. - 2 - Fol

Petitioner agreed to a $440,042 deficiency in tax and a $330,031.50 fraud penalty pursuant to section 6663 for 1995.

respondent. MEMORANDUM FINDINGS OF FACT AND OPINION RUWE, Judge: Respondent determined deficiencies and penalties with respect to petitioners’ Federal income taxes as follows: - 2 - Sam Kong Fashions, Inc. docket No. 9600-02 Penalty Year Deficiency Sec. 6663 1994 $135,643 $101,732.25 1995 103,999 77,999.25 Sam Kong docket No. 9601-02 Penalty Year Deficiency Sec. 6663 1994 $137,026 $102,769.50 1995 104,129 78,096.75 Run Yuan Chen docket No. 9601-02 Year Deficiency 1994 $137,026 1995 104,129 The p

Respondent also determined fraud penalties under section 6663¹ for 1990, ¹Unless otherwise indicated, all section references are to the Internal Revenue Code as amended, and all Rule references are to the Tax.Court Rules of Practice and Procedure.

fraud exists in a given situation is a factual determination that must be made after reviewing the particular facts and circumstances of the case. DiLeo v. Commissioner, 96 T.C. 858, 874 (1991), affd. 959 F.2d 16 (2d Cir. 1992). 7 In relevant part, sec. 6663 provides: SEC. 6663. IMPOSITION OF FRAUD PENALTY. (a) Imposition of Penalty.--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 port

OPINION GOEKE, Judge: Respondent determined deficiencies in petitioners’ Federal income tax, additions to tax, and penalties as follows: - 2 - Timothy Dean Strong--docket No. 821-01 In the alternative Penalty Penalty Addition to Tax Year Deficiency Sec. 6663 Sec. 6662 Sec. 6651(a)(1) 1990 $9,768 $7,326.00 $1,953.60 $2,442.00 1991 11,185 8,388.75 2,237.00 2,796.25 1992 19,794 14,845.50 3,958.80 4,948.50 1993 31,567 23,675.25 6,313.40 7,891.75 1994 6,613 4,959.75 1,322.60 N/A Strong Construction C

$30,953.94 in 1995 taxable to petitioners? We hold that they are; (5) is petitioner Dorene Payne (Mrs. Payne) entitled to innocent spouse relief under section 6015? We hold that she is not; and (6) are petitioners liable for the fraud penalty under section 6663? We hold that they are liable for the fraud penalty with respect to the unreported income they received from HRDC, but not with respect to their unreported bank deposit income. 1Unless otherwise indicated, all section references are to t

UM FINDINGS OF FACT AND OPINION RUWE, Judge: Respondent determined deficiencies and penalties with respect to petitioners' Federal income taxes as follows: SERVED JUN 2 8 2005 - 2 - Sam Kong Fashions, Inc. docket No. 9600-02 Penalty Year Deficiency Sec. 6663 1994 $135,643 $101,732.25 1995 103,999 77,999.25 Sam Kong docket No. 9601-02 Penalty Year Deficiency Sec. 6663 1994 $137,026 $102,769.50 1995 104,129 78,096.75 Run Yuan Chen docket No. 9601-02 Year Deficiency 1994 $137,026 1995 104,129 The p

Commissioner, supra at 653 (stating that “we must consider the same elements” in determining the fraud penalty, pursuant to section 6663, and fraudulent failure to file, pursuant to section 6651(f)); Kotmair v.

By notice of deficiency dated September 6, 2001, respondent determined deficiencies of $103,299, $36,968, and $67,180 and fraud penalties, pursuant to section 6663, of $77,474, $27,726, and $50,385 relating to 1991, 1992, and 1993, respectively.

By notices dated December 29, 1997, and October 4, 1999, respondent sent petitioner two notices of deficiency in which he determined fraud penalties, pursuant to section 6663, of $28,407, $31,721, $41,424, $44,930, and $16,722 relating to 1989, 1990, 1991, 1992, and 1993, respectively.

Respondent determined that the civil fraud penalty under section 6663 was applicable to Ahmed for 1995, 1996, and 1997 and to K & M for 1995 and 1996.

By notice of deficiency dated September 6, 2001, respondent determined deficiencies of $103,299, $36,968, and $67,180 and fraud penalties, pursuant to section 6663,1 of $77,474, $27,726, and $50,385 relating to 1991, 1992, and 1993, respectively.

pect to petitioners’ 1This case is consolidated with OMK Company Trust, docket No. 20202-02, and OMK Family Trust, docket No. 20203-02. - 2 - Federal income tax returns for 1998:2 Penalties Accuracy-related Fraud1 Petitioner Deficiency Sec. 6662(a) Sec. 6663 Orneal & Martha $125,772 -- $25,154 OMK Company Trust 50,221 $10,044 -- OMK Family Trust 824 165 -- 1Respondent determined in the alternative that, if Orneal and Martha Kooyers are not liable for the fraud penalty, they are liable for the ac

pect to petitioners’ 1This case is consolidated with OMK Company Trust, docket No. 20202-02, and OMK Family Trust, docket No. 20203-02. - 2 - Federal income tax returns for 1998:2 Penalties Accuracy-related Fraud1 Petitioner Deficiency Sec. 6662(a) Sec. 6663 Orneal & Martha $125,772 -- $25,154 OMK Company Trust 50,221 $10,044 -- OMK Family Trust 824 165 -- 1Respondent determined in the alternative that, if Orneal and Martha Kooyers are not liable for the fraud penalty, they are liable for the ac

pect to petitioners’ 1This case is consolidated with OMK Company Trust, docket No. 20202-02, and OMK Family Trust, docket No. 20203-02. - 2 - Federal income tax returns for 1998:2 Penalties Accuracy-related Fraud1 Petitioner Deficiency Sec. 6662(a) Sec. 6663 Orneal & Martha $125,772 -- $25,154 OMK Company Trust 50,221 $10,044 -- OMK Family Trust 824 165 -- 1Respondent determined in the alternative that, if Orneal and Martha Kooyers are not liable for the fraud penalty, they are liable for the ac

The sole issue remaining for our consideration is whether petitioner is liable for the civil fraud penalty under section 6663 for the taxable year 1990.

6663 provides: SEC. 6663. IMPOSITION OF FRAUD PENALTY (a) Imposition of Penalty.–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. (b) Determination of Portion Attributable to F

- 4 - By notice of deficiency dated December 29, 1997, respondent determined fraud penalties, pursuant to section 6663, of $44,930 and $16,722 relating to 1992 and 1993, respectively.

T.C. Memo. 2004-128 UNITED STATES TAX COURT JOHN MARRETTA, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 2289-03. Filed May 27, 2004. R determined that P was liable for penalties pursuant to sec. 6663, I.R.C.,. for the 1992, 1993, and 1994 tax years. During those years, P received distributions from a so-called Ponzi scheme. P did not report as income the amount of the distributions. P pleaded guilty to violating sec. 7201, I.R.C., for his failure to declare the amount of

MEMORANDUM FINDINGS OF FACT AND OPINION JACOBS, Judge: Respondent determined deficiencies in petitioner’s Federal income taxes, as well as fraud penalties pursuant to section 6663,1 for 1991-94 in the following amounts: 1All section references are to the Internal Revenue Code in effect at all relevant times, and Rule references are to the Tax Court Rules of Practice and Procedure.

1986. 3. Held, further, no portion of the underpayment of tax for either year was not due to fraud, except to the extent the underpayment resulted from causes other than unreported plumbing business income. Amounts determined. Sec. 6663(b), I.R.C. 1986. John S. Ponseti, for petitioners. Susan S. Canavello, for respondent. MEMORAND

Respondent determined deficiencies in petitioners’ Federal income taxes, - 2 - additions to tax pursuant to section 6654,1 accuracy-related penalties pursuant to section 6662(a), and fraud penalties pursuant to section 6663 for the taxable years 1995, 1996, and 1997, in the following amounts: Additions to Tax Penalties Year Deficiency Sec.

On September 30, 1997, respondent determined deficiencies relating to 1986 through 1989; additions to tax for fraud, pursuant to section 6653(b)1, relating to 1986, 1987, and 1988; and a fraud penalty, pursuant to section 6663, relating to 1989.

6663 1993 $52,022 $38,266.50 $2,137.78 1994 89,820 67,365.00 4,660.89 1995 146,427 $109,820.25 Respondent concedes that petitioner is not liable for the addition to tax for fraudulent failure to file for 1993 and 1994 under section 6651(f). Respondent also determined that, if petitioner is not liable for fraudulent failure to file under sectio

Respondent determined deficiencies in petitioners’ Federal income taxes, - 2 - additions to tax pursuant to section 6654,1 accuracy-related penalties pursuant to section 6662(a), and fraud penalties pursuant to section 6663 for the taxable years 1995, 1996, and 1997, in the following amounts: Additions to Tax Penalties Year Deficiency Sec.

ouis E. Peyton, pro se. Veena Luthra, for respondent. MEMORANDUM OPINION COHEN, Judge: Respondent determined the following deficiencies and penalties with respect to petitioner’s Federal income taxes for 1990 and 1991: - 2 - Penalty Year Deficiency I.R.C. Sec. 6663 1990 $29,538 $22,154 1991 32,493 24,370 Unless otherwise indicated, all section references are to the Internal Revenue Code in effect for the years in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure

By motion at the end of trial to conform the pleadings to the evidence under Rule 41(b)(1), respondent asserted that petitioner is liable for a fraud penalty under section 6663 on the portion of the alleged underpayment attributable to a claimed casualty loss deduction.

t of a pattern of activity to deceive. Accordingly, we hold that respondent has shown, by clear and convincing evidence, that petitioner fraudulently omitted income on his original 1990 tax return.3 3 Petitioner’s 1990 underpayment, for purposes of sec. 6663, is equal to the unreported income from the taxi leasing, administrative Medicaid payment, less the amount of business deductions allowed, including any deductions allowed after the issuance of the notice of deficiency. The parties will be -

docket No. 24646-95; and Sam Zhadanov, docket No. 24647-95. - 2 - additions to tax with respect to petitioners’ Federal income taxes: Vortex Products Corp. (Vortex), docket No. 24646-95 Addition to Tax Penalty FYE Sept. 30 Deficiency Sec. 6651(f)2 Sec. 6663 1991 $ 28,813 $21,610 1992 85,831 64,373 1993 77,968 $58,476 Sam and Anna Zhadanov (the Zhadanovs), docket No. 14021-95 Penalty Year Deficiency Sec. 6663 1990 $35,031 $26,273 1991 61,862 46,397 1992 77,522 58,142 Anna Zhadanov Penalty Year De

its of $737,949 for 1993. This net taxable amount is $543,372 greater than the amount of income reported by petitioners. In a statutory notice·of deficiency, respondent determined a $103,559 income tax deficiency and a $77,668.50 fraud penalty under section 6663. After the filing of a timely petition, respondent filed an answer and an amendment to the answer. Respondent,. by amendment to answer, sought an increased income tax deficiency of $165,211 and an increased fraud penalty of $123,907.50.

In that notice, respondent determined deficiencies in petitioners’ Federal income tax (tax), fraud penalties under section 6663, and accuracy-related penalties under section 6662(a), as follows: 4Mr.

; and Sam Zhadanov, docket No. 24647-95. SERVED APR 2 5 2002 - 2 - additions to tax with respect to petitioners' Federal income taxes: Vortex Products Corp. (Vortex), docket No. 24646-95 Addition to Tax Penalty FYE Sept. 30 Deficiency Sec. 6651(f)2 Sec. 6663 1991 $ 28,813 $21,610 1992 85,831 64,373 1993 77,968 $58,476 Sam and Anna Zha.danov (the Zhadanovs), docket No. 14021-95 Penalty Year Deficiency Sec. 6663 1990 $35,031 $26,273 1991 61,862 46,397 1992 77,522 58,142 Anna Zhadanov Penalty Year

hese consolidated cases, respondent determined deficiencies in petitioners’ Federal income tax and additions to tax and/or penalties as follow: Docket Nos. 9294-95 and 3284-96 Petitioner Cordes Finance Corp.: Penalties Year Deficiency sec. 6662(a)2 sec. 6663 1991 $606,863 $121,373 $9,773 1992 686,695 131,784 20,832 1993 743,902 145,200 13,428 Docket Nos. 20254-94 and 3305-96 Petitioner June Cordes:3 Additions to tax Year Deficiency sec. 6651(a)(1) sec. 6654 1989 $135,298 $33,825 $232 1990 134,60

hese consolidated cases, respondent determined deficiencies in petitioners’ Federal income tax and additions to tax and/or penalties as follow: Docket Nos. 9294-95 and 3284-96 Petitioner Cordes Finance Corp.: Penalties Year Deficiency sec. 6662(a)2 sec. 6663 1991 $606,863 $121,373 $9,773 1992 686,695 131,784 20,832 1993 743,902 145,200 13,428 Docket Nos. 20254-94 and 3305-96 Petitioner June Cordes:3 Additions to tax Year Deficiency sec. 6651(a)(1) sec. 6654 1989 $135,298 $33,825 $232 1990 134,60

hese consolidated cases, respondent determined deficiencies in petitioners’ Federal income tax and additions to tax and/or penalties as follow: Docket Nos. 9294-95 and 3284-96 Petitioner Cordes Finance Corp.: Penalties Year Deficiency sec. 6662(a)2 sec. 6663 1991 $606,863 $121,373 $9,773 1992 686,695 131,784 20,832 1993 743,902 145,200 13,428 Docket Nos. 20254-94 and 3305-96 Petitioner June Cordes:3 Additions to tax Year Deficiency sec. 6651(a)(1) sec. 6654 1989 $135,298 $33,825 $232 1990 134,60

hese consolidated cases, respondent determined deficiencies in petitioners’ Federal income tax and additions to tax and/or penalties as follow: Docket Nos. 9294-95 and 3284-96 Petitioner Cordes Finance Corp.: Penalties Year Deficiency sec. 6662(a)2 sec. 6663 1991 $606,863 $121,373 $9,773 1992 686,695 131,784 20,832 1993 743,902 145,200 13,428 Docket Nos. 20254-94 and 3305-96 Petitioner June Cordes:3 Additions to tax Year Deficiency sec. 6651(a)(1) sec. 6654 1989 $135,298 $33,825 $232 1990 134,60

inst the imposition of the addition to tax and penalty for fraud is a Cheek defense. A good faith misunderstanding of the Internal Revenue Code may be a defense against additions to tax pursuant to section 6653(b) and penalties for fraud pursuant to section 6663. See Cheek v. 3 The failure to file tax returns combined with the use of false Forms W-4 may be sufficient to establish criminal tax evasion. United States v. Parkinson, 602 F. Supp. 121, 123 (N.D. Ill. 1984), affd. without published opi

the fraud penalty pursuant to (continued...) - 2 - Additions to Tax and Penalties Year Deficiency Sec. 6653(b)(1)(A) Sec. 6653(b)(1)(B) Sec. 6661 1987 $173,817 $130,363 1 $43,454 Sec. 6653(b)(1) Sec. 6661 1988 53,937 $40,453 $13,484 Sec. 6651(a)(1) Sec. 6663 1989 73,279 $13,792 $54,959 Sec. 6654 Sec. 6662(c) 1990 124,891 $8,057 $24,978 150 percent of the interest due on $173,817. After concessions,2 the primary issue for decision is whether petitioner Donna A. Rowe is entitled to relief from joi

Consequently, petitioners are collaterally estopped from challenging that there was an underpayment of their income tax due to civil fraud under section 6663 for taxable year 1990.

Sections 6653(b) and 6663 Respondent also determined additions to tax for fraud under section 6653(b)(1) and (2) for 1983, 1984, and 1985; under section 6653(b)(1)(A) and (B) for 1986 and 1987; and under section 6653(b)(1) for 1988; and penalties for fraud under section 6663 for 1989 and 1990.

osecute pursuant to Rule 123(b), Tax Court Rules of Practice and Procedure, with respect to income tax deficiencies determined for taxable years 1993 and 1994. Held, further, P is liable for civil fraud penalties for 1993 and 1994 in accordance with sec. 6663, I.R.C. Willis Clark, pro se. Nicholas J. Richards, for respondent. - 2 - MEMORANDUM FINDINGS OF FACT AND OPINION NIMS, Judge: Respondent determined the following deficiencies and penalties with respect to petitioner’s Federal income taxes

Sections 6653(b) and 6663 Respondent also determined additions to tax for fraud under section 6653(b)(1) and (2) for 1983, 1984, and 1985; under section 6653(b)(1)(A) and (B) for 1986 and 1987; and under section 6653(b)(1) for 1988; and penalties for fraud under section 6663 for 1989 and 1990.

t determined the following deficiencies, additions to tax, and accuracy-related penalty with respect to petitioner’s Federal income taxes: - 2 - Accuracy- Related Additions to Tax Penalty Year Deficiency Sec. 6653(b)(1)(A) Sec. 6661(a) Sec. 6653(b) Sec. 6663 1986 $104,596 1$78,447 $26,149 ––- --- 1987 56,197 1 42,148 14,049 —–- --- 1988 50,951 —-- 12,737 $38,213 --- 1989 64,805 --- --- --- $48,604 1992 8,130 —-- —-- —-- --- 1Additionally, sec. 6653(b)(1)(B) imposes an addition of 50 percent of t

ON FOLEY, Judge: By notice dated November 15, 1996, respondent determined the following deficiencies and penalties relating to petitioners’ Federal income taxes: - 2 - Salih M. Zamzam and Mariam Zamzam, docket No. 2984-97 Penalties Year Deficiency Sec. 6663 Sec. 6662 1990 $74,453 $36,252 $4,496 1991 $74,390 $44,674 $2,475 1992 $49,635 $37,226 -- 1993 $30,703 $23,027 -- 1994 $26,707 $16,586 $1,278 Salih M. Zamzam, Inc. (ZMDI), docket No. 3004-97 Penalty Year Deficiency Sec. 6663 1990 $58,210 $43,

MEMORANDUM FINDINGS OF FACT AND OPINION GERBER, Judge: In a notice of deficiency addressed to petitioner, respondent determined deficiencies and penalties as follows: Penalty Year Deficiency Section 6663 1993 $8,798 $6,599 1994 34,661 25,996 1995 38,206 28,655 - 2 - After concessions,1 the issue for our consideration is whether petitioner is liable for fraud penalties under section 66632 for the 1993, 1994, and 1995 tax years.

Respondent also determined that Brian Wright (petitioner) is - 2 - liable for the fraud penalty, pursuant to section 6663,1 for taxable years 1992 through 1994, in the amounts of $4,242, $44,931, and $8,406, respectively.

King is liable, pursuant to section 6663, for the fraud penalty, but, pursuant to section 6662(b), petitioners are not liable for an accuracy-related penalty.

nd 1990 did not expire. - 2 - Gerald A. Sadler, pro se. Derek B. Matta and Gordon P. Sanz, for respondent. VASQUEZ, Judge: Respondent determined the following deficiency in and penalties on petitioner's Federal income tax: Penalties Year Deficiency Sec. 6663 1989 $19,797.59 $44,473.19 1990 -- 19,500.00 By amendment to answer, respondent increased the amount of the fraud penalty for 1989 to $55,947.37. Unless otherwise indicated, all section references are to the Internal Revenue Code in effect f

ent. MEMORANDUM FINDINGS OF FACT AND OPINION VASQUEZ, Judge: Respondent determined the following deficiencies in, penalties on, and additions to petitioners' Federal income taxes: - 2 - Betty June Dykstra: Penalties Additions to Tax Year Deficiency Sec. 6663 Sec. 6662(a) Sec. 6651(a)(1) Sec. 6651(f) Sec. 6654 1994 * $5,355 $808 $2,865 $0 $0 1995 33,110 0 0 0 24,372 1,704 * Respondent determined a deficiency of $11,684 against both Betty June and Pieter Dykstra. Pieter Dykstra: Penalty Additions

Court does not have jurisdiction over this case because the notice of deficiency - 4 - does not determine a deficiency for 1989 but merely gives notice to petitioner of respondent's determination that petitioner is liable for a penalty pursuant to section 6663. Section 6665 provides that "additions to the tax, additional amounts, and penalties * * * shall be paid upon notice and demand and shall be assessed, collected, and paid in the same manner as taxes". A deficiency in tax is assessed, coll

6663 1988 $90,137 $45,751.50 $7,284 1989 66,240 16,560 $36,099.75 1990 46,694 11,674 32,841.75 Respondent also determined deficiencies, an addition to tax, and penalties for 1988 and 1989 with respect to petitioners Anthony J. and Carol L. Ferrentino's Federal income taxes, and for 1990 with respect to petitioner Anthony J. Ferrentino's Federa

ted in Orange, Texas. In 1985, G & B Products purchased the Peveto and converted it from a grain elevator into a grinding facility that 2 Respondent concedes that Sandra J. Wickersham is not liable for the deficiency or the fraud penalty pursuant to sec. 6663 for 1989. -3- G & B Products used to grind and bag rice hulls. On August 8, 1988, the Small Business Administration (SBA) foreclosed on the Peveto. Before February 1989, Mr. Wickersham became interested in property being auctioned by the Re

We hold that they do in the amounts of $73,233.69, $80,607, and $103,724, respectively.2 (2) Are petitioners liable for the fraud penalty under section 6663 for each of the years 1992, 1993, and 1994?

6663 1988 $90,137 $45,751.50 $7,284 1989 66,240 16,560 $36,099.75 1990 46,694 11,674 32,841.75 Respondent also determined deficiencies, an addition to tax, and penalties for 1988 and 1989 with respect to petitioners Anthony J. and Carol L. Ferrentino's Federal income taxes, and for 1990 with respect to petitioner Anthony J. Ferrentino's Federa

TATES TAX COURT LINDA D. FASON, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 12308-98. Filed December 14, 1999. R disallowed deductions claimed on P’s 1994 income tax return and determined the civil fraud penalty pursuant to sec. 6663, I.R.C. In substantiation of these deductions, P offered two documents which evidence at trial indicated were not legitimate. Held: On the facts, P failed to establish her entitlement to the deductions claimed and is therefore liable for th

n references are to the Internal Revenue Code as in effect for the year in issue, and all Rule references are to the Tax Court Rules of Practice and (continued...) - 2 - deficiency in petitioner's 1993 Federal income tax in the amount of $57,327, and an addition to tax pursuant to section 6651(a)(1), for failure to file, and a penalty pursuant to section 6663, for fraud, in the amounts of $14,332 and $42,995, respectively.

OPINION GALE, Judge: In these consolidated cases, respondent determined deficiencies in petitioners’ Federal income taxes and fraud penalties as follows: - 2 - Petitioner Simco Automotive Pump Co., Inc. (Simco): Fraud penalty Fiscal year Deficiency sec. 6663 June 30, 1990 $24,453 $18,340 June 30, 1991 27,225 20,419 Petitioner John R. MacLean (John): Fraud penalty Year Deficiency sec. 6663 1989 $2,423 $4,464 1990 --- 16,664 1991 11,089 18,332 Unless otherwise noted, all section references are to

MEMORANDUM OPINION FOLEY, Judge: By notice dated April 16, 1998, respondent determined a $4,355 deficiency and a $3,266 section 6663 penalty relating to petitioners' 1996 Federal income tax.

, Judge: By notice dated March 20, 1997, respondent determined the following deficiency, additions to tax, and penalty relating to petitioners' Federal income taxes: Additions to Tax Year Deficiency Sec. 6653(b) Sec. 6653(b)(1)(A) Sec. 6653(b)(1)(B) Sec. 6663 1987 $4,097 -- $13,676 1 -- 1988 -- $12,849 -- -- -- - 2 - 1989 -- -- -- -- $11,746 1 Fifty percent of the statutory interest on $18,234, computed from Apr. 15, 1988, to the earlier of the date of assessment or the date of payment. All sect

- 4 - pursuant to section 6653(b) for the years 1978 through 1983 and 1985 through 1988, and the fraud penalty pursuant to section 6663 for 1989.2 We hold he is.

6663 1988 $90,137 $45,751.50 $7,284 1989 66,240 16,560 $36,099.75 1990 46,694 11,674 32,841.75 Respondent also determined deficiencies, an addition to tax, and penalties for 1988 and 1989 with respect to petitioners Anthony J. and Carol L. Ferrentino's Federal income taxes, and for 1990 with respect to petitioner Anthony J. Ferrentino's Federa

6663 1989 $21,344 $15,474 $112 -- 1990 11,065 -- -- $8,299 1991 6,882 -- -- 5,162 1992 11,934 8,652 336 -- 1993 11,597 18,408 486 -- 1994 14,183 6,170 662 -- 1 The cover letter and schedule 1 of the notice of deficiency show this as a $8,408 addition to tax under sec. 6663. Schedule 7 of the notice of deficiency shows this as a $8,408 addition

r that would result in a $1,032,409 income tax deficiency and a $392,873.13 overpayment after considering payments made after issuance of the notice of deficiency. Respondent's computation for 1989 would also result in a $774,307 fraud penalty under section 6663. This opinion addresses the parties' controversy over the computation of the decision(s) to be entered. Respondent had determined deficiencies in petitioners' 1989 and 1990 Federal income tax in the amounts of $1,111,292 and $1,111,320,

, 1998. Larry Jackson Beard and Gloria Dean Beard, pro sese. Martha J. Weber, for respondent. MEMORANDUM OPINION PARR, Judge: Respondent determined deficiencies in petitioners' Federal income taxes and penalties as follows: Penalties Year Deficiency Sec. 6663 1991 $4,980.48 $3,735.36 1992 5,256.73 4,144.30 - 2 - All section references are to the Internal Revenue Code in effect for the taxable years in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure, unless oth

In addition to our literal reading of section 6663(a), in the view of the text of section 6663 as a whole, we find Congress’ intent for the relevant phrase by examining the evolution of section 6663(a).

Background Respondent issued a notice of deficiency to petitioners determining a deficiency in their Federal income tax for 1991 in the amount of $61,304 and an addition to tax for fraud under section 6663 in the amount of $45,978.

Zaban is liable for the fraud additions to tax for 1986 and 1987 pursuant to section 6653(b)(1)(A) and (:B) and for 1988 pursuant to section 6653(b)(1) and for the fraud penalty for 1989 pursuant to section 6663; (4) whether Mrs.

Taylor (petitioner) received $280,698 (or any lesser amount) of income from a check-kiting scheme in 1988;2 (2) whether petitioner is liable for the fraud addition to tax pursuant to section 6653(b)(1) for 1988 and fraud penalties pursuant to section 6663 for 1989 and 1990; (3) whether Elinor Taylor (Mrs.

74, $68,648, $238,665, and $57,708, respectively;2 (2) whether petitioner failed to timely file his Federal income tax returns for the 1989 and 1991 tax years: (3) whether petitioner is liable for an addition to tax for fraud pursuant to section 6653(b) for the 1988 tax year; and (4) whether petitioner is liable for penalties for fraud pursuant to section 6663 for the 1989, 1990, and 1991 tax years.

6,059 --- 1989 21,904 --- --- --- --- --- $16,428 1990 3,300 --- --- --- --- --- 2,475 1 50% of the interest due on $49,562 2 50% of the interest due on $132,166 3 50% of the interest due on $97,352 After concessions, the issues for decision are: (1) Whether petitioner is liable for additions to tax and penalties for fraud under section 6653(b) or section 6663 for any taxable year at issue.

ty under section 1031, (2) if the transaction does not qualify for section 1031 exchange, whether petitioners are entitled to report the gain in 1990 under the installment sale method, and (3) whether petitioners are liable for a fraud penalty under section 6663. FINDINGS OF FACT2 At the time the petitions in this case were filed, petitioners resided in Danville, California. Petitioners are married and filed joint Federal income tax returns for each of the years in issue. During the years in iss

ty under section 1031, (2) if the transaction does not qualify for section 1031 exchange, whether petitioners are entitled to report the gain in 1990 under the installment sale method, and (3) whether petitioners are liable for a fraud penalty under section 6663. FINDINGS OF FACT2 At the time the petitions in this case were filed, petitioners resided in Danville, California. Petitioners are married and filed joint Federal income tax returns for each of the years in issue. During the years in iss

6663 1989 $13,501 --- $10,126 1990 25,904 $30 19,316 1991 21,334 51 15,809 As an alternative to the section 6663 fraud penalty, respondent determined additional accuracy-related penalties pursuant to - 2 - section 6662(a) in the respective amounts of $2,700, $5,181, and $4,267 for 1989, 1990, and 1991. All section references are to the Intern

r respondent. MEMORANDUM OPINION GERBER, Judge: Respondent determined deficiencies in and additions to, and a penalty on, petitioner’s Federal income tax as follows: Additions to Tax and Penalty Sec. Sec. Sec. Sec. Sec. Sec. 6651 6653 6653 6653 6653 Sec. 6663 Year Deficiency (a)(1) (b)(1) (b)(2) (b)(1)(A) (b)(1)(B) 6661 (a) 1985 $34,812 --- $23,770 1 --- --- $8,703 --- 1986 247,288 --- --- --- $192,009 1 61,812 --- 1987 46,021 --- --- --- 42,339 1 11,505 --- -2- 1988 121,986 --- 92,640 --- --- -

After concessions,1 the issues for decision are whether petitioner is liable for additions to tax pursuant to section 6653(b)(1)(A) and (B) for the 1986 and 1987 tax years and section 6653(b)(1) for the 1988 tax year and for a penalty pursuant to section 6663 for the 1989 tax year.

zie, for petitioners. Kathryn K. Vetter and Daniel J. Parent, for respondent. MEMORANDUM FINDINGS OF FACT AND OPINION GERBER, Judge: Respondent determined deficiencies in 1989 income tax, and penalties as follows: Fraud Penalty Petitioner Deficiency Sec. 6663 McDonald $53,041 $39,781 Maynard 71,380 53,535 - 2 - After considering the parties’ concessions and stipulations to be bound by the outcome of other cases, the issues remaining for our consideration are: (1) Whether petitioners’ partnership

EMORANDUM FINDINGS OF FACT AND OPINION WRIGHT, Judge: Respondent determined deficiencies in and additions to tax and a penalty with respect to petitioners' Federal income taxes as follows: Additions to Tax and Penalty Year Deficiency Sec. 6653(b)(1) Sec. 6663 Sec. 6661 1987 $10,832 $8,124 - $2,708 1988 35,158 26,369 - 8,790 1989 37,450 - $28,088 - - 2 - The issues for decision are: (1) Whether petitioners had embezzlement income during taxable years 1987, 1988, and 1989. We hold that they did no

imitations, and the tax “may be assessed . . . at any time.” “[T]he determination of fraud for purposes of the period of limitations on as- sessment under section 6501(c)(1) is the same as the determination of fraud for purposes of the penalty under section 6663 . . . .” Neely v. Com- missioner, 116 T.C. 79, 85 (2001). As explained more fully in our discus- sion of the fraud penalty, we find that petitioner’s income tax returns for 2001–2005 were fraudulent. See infra pp. 81–88. His income tax l

The Notice of Deficiency also reflected civil fraud penalties under section 6663 of $459,699 for 2006 and $174,292 for 2007.

A Notice of Deficiency was issued to the Vettels on June 21, 2019, determining deficiencies in tax as follows: § 6663 Fraud § 6662 Accuracy- Year Deficiency Penalty Related Penalty 2006 $200,967 $150,725.25 — 2007 134,282 100,711.50 — 2008 25,724 19,293.00 — 2009 13,360 10,020.00 — 2010 282,513 211,884.75 — 2014 9,571 — $1,914.20 The Notice of Deficiency determined the fraud penalties against Mr.

at 653 (indicating that the inquiry under section 6651(f) is the same as under current section 6663); Brennan v.

Rather, it holds that the Commissioner obtained supervisory approval to assert various penalties, including the civil fraud penalty under section 6663, in compliance with section 6751(b).

In 1989 Congress combined the accuracy-related penalties into section 66628 and moved the fraud penalty into its own section 6663 under OBRA 89 § 7721, 103 Stat.

The Answer constituted the first formal communication to River Moss and RM Management that the IRS intended to assert the section 6663 penalty.

On that form he recommended that the IRS assert against petitioner a civil fraud penalty under section 6663 or (in the alternative) an accuracy-related penalty under section 6662(d).

imitations, and the tax “may be assessed . . . at any time.” “[T]he determination of fraud for purposes of the period of limitations on as- sessment under section 6501(c)(1) is the same as the determination of fraud for purposes of the penalty under section 6663 . . . .” Neely v. Com- missioner, 116 T.C. 79, 85 (2001). As explained more fully in our discus- sion of the fraud penalty, we find that petitioner’s income tax returns for 2001–2005 were fraudulent. See infra pp. 81–88. His income tax l

%), if “the failure to file any return is fraudulent”. The Commissioner argues for that addition enhanced for fraud. In applying section 6651(f), we consider essentially the same elements as when considering the imposition of the fraud penalty under section 6663. See Clayton, 102 T.C. at 653. Fraud under section 6663 “may be proved by circumstantial evidence and from reasonable inferences drawn from the facts because direct proof of the taxpayer’s intent is rarely available. . . . The intent to

He determined the following deficiencies and penalties against the Hoyals: Penalties Year Deficiency §6662(a) §6663 2012 $11,511,240 $121,381 $8,178,253 2013 5,090,910 74,645 3,483,248 He determined the following deficiencies and penalties for Crater Lake Trust: 14 [*14] Year Deficiency §6663 Penalty 2012 $6,342,991 $4,757,243 2013 723,893 542,920 Petitioners timely filed Petitions with the Court.

In a Notice of Deficiency dated July 13, 2021, respondent determined a $22,248 deficiency relating to petitioner’s 2018 joint return and a $17,069 section 6663 civil fraud penalty.

In the light of the Stipulations and Amended Pleadings, respondent con- tends that petitioners are liable for deficiencies of $15,826 and $87,483 for 1999 and 2000, respectively, and that petitioner husband is liable for civil fraud penalties of $11,870 and $65,613, respectively, under section 6663.1 We will sustain the deficiency and fraud determinations, with the precise amounts to be calculated under Rule 155.

2005) (determining in a Double Jeopardy case that section 6663 civil fraud penalties serve a remedial purpose), aff’g T.C.

Simpson: Additions to Tax/Penalties Year Deficiency § 6663 § 6651(f) § 6651(a)(2) § 6654 2012 $7,203,670 $5,402,753 — — — 20138 2,495,267 — $1,400,964 $483,091 $33,576 He determined the following deficiencies and penalties for Scenic Trust: Year Deficiency § 6663 Penalty 2012 $6,363,735 $4,772,801 2013 1,337,331 1,002,998 Petitioners timely filed Petitions with the Court.

The same factors relevant to determining fraudulent intent under section 6663 are relevant to determining fraudulent intent for failure to file.

The same factors relevant to determining fraudulent intent under section 6663 are relevant to determining fraudulent intent for failure to file.

Served 08/28/23 2 [*2] stamped “ORIGINAL” and set forth respondent’s determination of a deficiency and a section 6663 civil fraud penalty.

Pursuant to the Court’s February 25, 2019, Order, we granted respondent’s Motion for Partial Summary Judgment filed November 19, 2014, holding that petitioner is liable for the federal income tax deficiencies determined for 2000 and 2001 and the section 6663 civil 1 This opinion supplements Minemyer v.

The same factors relevant to determining fraudulent intent under section 6663 are relevant to determining fraudulent intent for failure to file.

§ 6663 2003 $53,081 — — $39,811 2004 112,892 — — 84,669 2005 91,650 $18,330 — 68,738 2006 69,150 — $515 48,794 2007 51,838 9,942 — 35,035 2008 68,428 17,107 325 39,058 2009 7,851 1,963 — 5,888 The deficiency determinations are largely based on unreported income from the bank deposits analysis. As relevant to this Opinion, the Commissioner de

1 The section 6663 penalties are determined only against petitioner husband, Jason Todd Reynolds. 3 [*3] During the years in issue petitioner wife primarily stayed at home with the children. In her spare time she operated a solo legal practice out of the family’s basement where she represented clients in small business and family law matters. She took a

In his answer the Commissioner also asserted fraud penalties under section 6663, but he later conceded them.

On that form she recommended that the IRS assert against Greg fraud penalties under section 6663 for 2003–2006.

ssor, and affiliated entities) owes: (1) approximately $150 million -16- [*16] in excise taxes; (2) penalties under section 6651 for failing to file Forms 5330, Return of Excise Taxes Related to Employee Benefit Plans; (3) penalties for fraud under section 6663; and (4) penalties for false and fraudulent statements made on refund claims filed by taxpayer 1’s predecessor subsidiary, the employer organization for taxpayer 3.9 Important here is that taxpayer 3’s employer organization filed for bank

He admitted that he had received unreported income and was liable for the section 6663 civil fraud penalty for each of these years.

On March 25, 2016, the agent’s group manager signed a penalty approval form approving section 6663 penalties for 2011 and 2012.6 For 2013 and 2014, the agent also concluded that Mr.

Whether Petitioner’s Failure To File Was Fraudulent In determining whether a taxpayer had the requisite fraudulent intent for imposition of the section 6651(f) addition to tax, the Court considers the same elements that it considers in imposing the fraud penalty under section 6663 and former section 6653(b)(1).

Insurance expenses --- --- --- 14,506 Total adjustments 169,468 186,754 113,691 255,160 - 18 - [*18] In addition respondent determined civil fraud penalties under section 6663 of $52,679.25, $82,359.75, $82,167.75, and $98,225.25 for the years at issue.

In that notice of deficiency, respondent determined the following deficiencies, as well as section 66513 failure-to-file additions to tax, a section 6662 accuracy-related penalty, and section 6663 fraud penalties:4 1As a consequence, petitioners forfeited their opportunity to dispute the allegations in respondent’s motion.

Graev III led the Commissioner to concede the section 6663 fraud penalty against both R&A and the Ryders individually for each year at issue.

“[T]he determination of fraud for - 12 - [*12] purposes of the period of limitations on assessment under section 6501(c)(1) is the same as the determination of fraud for purposes of the penalty under section 6663.” Neely v.

Graev III led the Commissioner to concede the section 6663 fraud penalty against both R&A and the Ryders individually for each year at issue.

Graev III led the Commissioner to concede the section 6663 fraud penalty against both R&A and the Ryders individually for each year at issue.

Graev III led the Commissioner to concede the section 6663 fraud penalty against both R&A and the Ryders individually for each year at issue.

Graev III led the Commissioner to concede the section 6663 fraud penalty against both R&A and the Ryders individually for each year at issue.

MEMORANDUM FINDINGS OF FACT AND OPINION KERRIGAN, Judge: In two notices ofdeficiency dated January 6, 2016, respondent determined Federal income tax deficiencies of$29,156 and $26,751 and section 6663 penalties of$21,867 and $14,937 for 2012 and 2013 (years in SERVED Mar 05 2020 - 2 - [*2] issue), respectively.

Adams agreed to a 1999 tax deficiency of$91,762 and a civil fraud penalty under section 6663¹ of$68,822.

The IRS asserted and assessed civil-fraud penalties under section 6663 against Francel's wife for the years 2003-06.

They also dispute all adjustments and calculations for each ofthe years at issue, arguing that the Commissioner erred in determining their deficiencies in Federal income tax, penalties under section 6663, and additions to tax under section 6651(f).

On November 10, 2016, the revenue agent's immediate supervisor executed a Civil Penalty Approval Form which approved -8- [*8] substantial understatement penalties pursuant to section 6662 as an alternative position to section 6663 fraud penalties for 2010-13.¹ OPINION I.

Rogers determining a section 6663 fraud penalty on the entire underpayment and alternatively penalties under sections 6662(h) and 6662A on the DAT adjustment and a section 6662(a) accuracy-related penalty for negligence, a substantial understatement ofincome tax, and a substantial valuation misstatement on the COGS and 2006 other adjustments or alternatively on the ent

Byrum is liable for section 6663 fraud penalties.¹ ¹Unless otherwise indicated, all section references are to the Internal Revenue Code relating to the years in issue, and all Rule references are to the Tax Court Rules ofPractice and Procedure.

MEMORANDUM FINDINGS OF FACT AND OPINION VASQUEZ, Judge: In these consolidated cases, respondent determined deficiencies and section 6663 civil fraud penalties for tax years 2007 and 2008 as follows: SERVED Dec 26 2018 - 2 - [*2] Civil fraud penalty¹ Year Deficiency sec.

In one ofthe notices--forthe 2007-09 tax years, he stated that he had made ajeopardy assessment that included large fraud penalties under section 6663.9 The Commissioner introduced no evidence at trial that the IRS employee who made the initial penalty determinations had written approval from his immediate supervisor for the civil fraud penalty or an alternative accuracy-related penalty.

Respondent also determined civil fraud penalties under section 6663 of$195,598 and $152,771 for 2006 and 2007, respectively.

ion to reopen the record to include a heavily redacted 12-page interoffice memorandum from "Associate Area Counsel (San Francisco, Group 1) (Small Business/Self- Employed)" to the Appeals officer regarding "Review ofProposed Notice ofDeficiency" for petitioners for 2008 and 2009 that recommends imposition ofthe section 6662(a) penalty (in lieu ofa section 6663 fraud penalty).

Penalties In his post-trial briefrespondent conceded that petitioners are not liable for fraud penalties under section 6663, as the IRS had determined in the notice ofde- ficiency for 2008, 2010, and 2011.

ue, and all Rule references are to the Tax Court Rules ofPractice and Procedure. 2 The period for assessment ofincome tax has expired with respect to petitioners' income tax liabilities for 1992 through 1999. - 3 - P3] Fraud penalty Year Deficiency sec. 6663 2000 $276,596.00 $207,447.00 2001 265,143.00 198,857.25 2002 244,427.00 183,320.25 2003 337,244.00 252,933.00 2004 299,062.00 224,296.50 2005 174,870.00 131,152.50 2006 308,746.00 231,559.50 2007 124,137.00 93,102.75 2008 137,467.00 103,100.

The Commissioner eventually issued a notice of deficiency in which he determined deficiencies for 2008, 2010, and 2011 and fraud penalties under section 6663 for 2008 through 2011.¹ The underpayments ¹All section references are to the Internal Revenue Code (Code) in effect for the years in issue.

MEMORANDUM FINDINGS OF FACT AND OPINION COHEN, Judge: Respondent determined deficiencies of$13,247, $29,800, and $17,207; accuracy-related penalties under section 6662(a) of$1,029, $646.80, and $1,193.20; and fraud penalties under section 6663 of$6,076.50, $19,699.50, and $8,093.25, for 2012, 2013, and 2014, respectively.

Penalties In his post-trial briefrespondent conceded that petitioners are not liable for fraud penalties under section 6663, as the IRS had determined in the notice ofde- ficiency for 2008, 2010, and 2011.

In one ofthe notices--forthe 2007-09 tax years, he stated that he had made ajeopardy assessment that included large fraud penalties under section 6663.9 The Commissioner introduced no evidence at trial that the IRS employee who made the initial penalty determinations had written approval from his immediate supervisor for the civil fraud penalty or an alternative accuracy-related penalty.

Respondent also determined civil fraud penalties under section 6663 of$195,598 and $152,771 for 2006 and 2007, respectively.

In one ofthe notices--forthe 2007-09 tax years, he stated that he had made ajeopardy assessment that included large fraud penalties under section 6663.9 The Commissioner introduced no evidence at trial that the IRS employee who made the initial penalty determinations had written approval from his immediate supervisor for the civil fraud penalty or an alternative accuracy-related penalty.

Penalties In his post-trial briefrespondent conceded that petitioners are not liable for fraud penalties under section 6663, as the IRS had determined in the notice ofde- ficiency for 2008, 2010, and 2011.

In one ofthe notices--forthe 2007-09 tax years, he stated that he had made ajeopardy assessment that included large fraud penalties under section 6663.9 The Commissioner introduced no evidence at trial that the IRS employee who made the initial penalty determinations had written approval from his immediate supervisor for the civil fraud penalty or an alternative accuracy-related penalty.

MEMORANDUM FINDINGS OF FACT AND OPINION VASQUEZ, Judge: In these consolidated cases, respondent determined deficiencies and section 6663 civil fraud penalties for tax years 2007 and 2008 as follows: SERVED Dec 26 2018 - 2 - [*2] Civil fraud penalty¹ Year Deficiency sec.

In one ofthe notices--forthe 2007-09 tax years, he stated that he had made ajeopardy assessment that included large fraud penalties under section 6663.9 The Commissioner introduced no evidence at trial that the IRS employee who made the initial penalty determinations had written approval from his immediate supervisor for the civil fraud penalty or an alternative accuracy-related penalty.

enalties with respect to petitioner's Federal income tax for tax years 2008-12 (years at issue): ¹James T. Runyon represented petitioner at trial. SERVED Aug 07 2017 - 2 - [*2] Addition to tax Penalties Year Deficiency sec. 6651(a)(1) Sec. 6662(a) Sec. 6663 2008 $62,205 $15,551 $4,315 -0- 2009 38,416 9,604 1,740 -0- 2010 58,306 14,576 2,317 $13,899 2011 45,618 -0- -0- 22,877 2012 11,924 -0- -0- 8,943 For tax years 2010-12 respondent determined as an alternative to the fraud penalty that petition

hat contention, they pointed to IRS spreadsheets, ofwhich they had recently become aware, indicating that they could be entitled to substantial additional deductions against their 2003-2006 4In the closing agreement petitioners conceded liability for fraudulent fail- ure-to-file additions to tax under section 6651(f) for 2003, 2005, and 2006 and a section 6663 fraud penalty for 2004.

MEMORANDUM FINDINGS OF FACT AND OPINION PUGH, Judge: Respondent determined deficiencies in income tax and penalties under section 6663 as follows:¹ ¹ Unless otherwise indicated, all section references are to the Internal Revenue Code of 1986, as amended and in effect at all relevant times.

2002-234 (reiterating the principle that additions to tax, including the 75% civil fraud penalty under section 6663, are remedial rather than punitive); Louis v.

hat contention, they pointed to IRS spreadsheets, ofwhich they had recently become aware, indicating that they could be entitled to substantial additional deductions against their 2003-2006 4In the closing agreement petitioners conceded liability for fraudulent fail- ure-to-file additions to tax under section 6651(f) for 2003, 2005, and 2006 and a section 6663 fraud penalty for 2004.

ic] deficien- cies in income taxes due from the petitioner Charles Garavaglia for the taxable years 1989 and 1990 of$97,070 and $114,683 respec- tively; and That there are additions to the taxes due from the petitioner Charles Garavaglia pursuant to I.R.C. Section 6663 for the taxable years 1989 and 1990 of$72,805.50 and $86,012.25, respectively. On January 13, 2012, the Court entered a decision in Ms. Garavaglia's Tax Court case. That decision stated in pertinent part: Pursuant to the opinion o

2013-255 (distinguishing the fraudulent failure-to-file addition to tax under section 6651(f) from a section 6663 civil fraud penalty).

re rounded to the nearest dollar. SERVED Apr 06 2017 - 2 - [*2] In a notice ofdeficiency dated March 6, 2014, respondent determined the following deficiencies, additions to tax, and penalties: Addition to tax Penalty Year Deficiency sec. 6651(a)(1) sec. 6663 2008 $248,731 $61,684 $185,051 2009 145,187 7,128 107,596 2010 64,715 16,179 48,536 The issues for our consideration are whether petitioners: (1) underreported gross receipts and overstated deductions, (2) are liable for additions to tax und

The only issue for decision is whether petitioners are liable for fraud penalties under section 6663 for tax years 2011-13.

The definition offraud for purposes ofsection 6501(c)(1) is the same as the definition offraud for purposes ofthe section 6663 fraud penalty.

ifthe failure to file the returns is fraudulent. In applying section 6651(f) to determine whether petitioners' failure to file tax returns was fraudulent, we consider the same elements considered in cases involving former section 6653(b) and present section 6663. See Clayton v. Commissioner, 102 T.C. 632, 653 (1994); Niedringhaus v. Commissioner, 99 T.C. 202, 211-213 (1992). The civil fraud penalty is a sanction provided primarily as a safeguard for the protection ofthe revenue and to reimburse

In order for that addition to tax to apply, we must consider essentially the same matters that are involved in determining whether a taxpayer is liable for the fraud penalty under section 6663 and its predecessor provision, section 6653(b).

. MEMORANDUM OPINION PUGH, Judge: In a notice ofdeficiency dated March 6, 2014, respondent determined the following deficiencies, additions to tax, and penalties: SERVED Nov 09 2016 - 2 - [*2] Addition to tax Penalty Year Deficiency sec. 6651(a)(1) sec. 6663 2005 $314,134 $78,534 $235,601 2006 185,349 46,217 138,652 2007 227,785 56,461 169,384 Unless otherwise indicated, all section references are to the Internal Revenue Code of 1986, as amended and in effect for the years in issue. Rule referen

ifthe failure to file the returns is fraudulent. In applying section 6651(f) to determine whether petitioners' failure to file tax returns was fraudulent, we consider the same elements considered in cases involving former section 6653(b) and present section 6663. See Clayton v. Commissioner, 102 T.C. 632, 653 (1994); Niedringhaus v. Commissioner, 99 T.C. 202, 211-213 (1992). The civil fraud penalty is a sanction provided primarily as a safeguard for the protection ofthe revenue and to reimburse

, 2013, Mr. Drobny filed on behalfofpetitioners a response to respondent's motion for entry ofdecision. In that response, Mr. Drobny opposed that motion on behalfofpetitioners on essentially two grounds. The first 27Sec. 6653(b) is the predecessor ofsec. 6663 that Congress enacted to be effective for tax returns, the due date for which (determined without regard to extensions) was after December 31, 1989. - 50 - [*50] ground was that Mr. Niehus was no longer an active member ofthe Illinois State

ed "Additions to the Tax and Additional Amounts." This subchapter includes 13 sections, including the additions to tax for failure timely to file a return or timely pay tax, the accuracy-relatedpenalty under section 6662, and the fraud penalty under section 6663. Section 6665, the last section in this subchapter, is captioned "Applicable Rules." It states that, except as otherwise provided in Title 26, "the additions to the tax, additional amounts, and penalties provided by this chapter shall be

ifthe failure to file the returns is fraudulent. In applying section 6651(f) to determine whether petitioners' failure to file tax returns was fraudulent, we consider the same elements considered in cases involving former section 6653(b) and present section 6663. See Clayton v. Commissioner, 102 T.C. 632, 653 (1994); Niedringhaus v. Commissioner, 99 T.C. 202, 211-213 (1992). The civil fraud penalty is a sanction provided primarily as a safeguard for the protection ofthe revenue and to reimburse

The notice also determined that petitioner is liable for section 6663 fraud penalties of$15,420.75 and $15,111.75 for the years in issue.

r is entitled to a deduction under sections 861 and 13412 for 2002; (3) petitioner is liable for additions to tax under section 6651(f) for fraudulent failure to file for 2001, 2003, and 2004; (4) petitioner is liable for a civil fraud penalty under section 6663 for 2002; (5) petitioner is liable for additions to tax under section 6651(a)(2) for failure to pay for 2001, 2003, and 2004; (6) petitioner is liable for an addition to tax under section 6654 for failure to make estimated tax payments f

ifthe failure to file the returns is fraudulent. In applying section 6651(f) to determine whether petitioners' failure to file tax returns was fraudulent, we consider the same elements considered in cases involving former section 6653(b) and present section 6663. See Clayton v. Commissioner, 102 T.C. 632, 653 (1994); Niedringhaus v. Commissioner, 99 T.C. 202, 211-213 (1992). The civil fraud penalty is a sanction provided primarily as a safeguard for the protection ofthe revenue and to reimburse

Section 6663(a) Penalties Respondent argues that petitioners are liable for the section 6663 fraud penalties for the years in issue.

With respect to fraud penalties under section 6663, respondent bears the burden ofproofby clear and convincing evidence.

o file the returns is fraudulent. In applying section 6651(f) to determine whether petitioner's failure to file tax returns was fraudulent, we consider the same elements considered in - 10 - [*10] cases involving former section 6653(b) and present section 6663. S_ee Clayton v. Commissioner, 102 T.C. 632, 653 (1994); Niedringhaus v. Commissioner, 99 T.C. 202, 211-213 (1992). The civil fraud penalty is a sanction provided primarily as a safeguard for the protection ofthe revenue and to reimburse t

Respondent determined income tax deficiencies and fraud penalties under section 6663 for 2008 and 2009.

Donohue, for respondent. MEMORANDUMFINDINGS OF FACT AND OPINION COHEN, J__udgg: Respondent determined deficiencies in and penalties on petitioner's Federal income tax as follows: MRVED AUG 1 2 2015 - 2 - [*2] Penalties Year Deficiency Sec. 6651(f) Sec. 6663 1995 $199,088 $149,316.00 -- 1996 188,065 141,048.75 -- 1997 86,214 64,660.50 -- 1998 180,137 135,102.75 -- 1999 323,534 242,650.50 -- 2000 507,598 380,698.50 -- 2001 358,272 268,704.00 -- 2002 322,984 -- $242,238 As alternatives to the sect

aw determinations by asserting, in full against each petitioner, all tax- able deposits into theirjoint bank accounts. In docket No. 14991-13 respondent determined against petitioner Duong deficiencies and fraud penalties as follows: Year Deficiency Sec. 6663 2007 $48,953 $30,536 2008 18,439 13,201 In docket No. 15151-13 respondent determined against petitioner Tran deficiencies, additions to tax, and penalties as follows: Sec. 6662(a) Sec. Sec. Sec. (alternative Year Deficiency 6651(a)(2) 6651(

Considering all ofthe facts and circumstances, we find that petitioner is liable for the section 6663 civil fraud penalty for each year at issue.

aw determinations by asserting, in full against each petitioner, all tax- able deposits into theirjoint bank accounts. In docket No. 14991-13 respondent determined against petitioner Duong deficiencies and fraud penalties as follows: Year Deficiency Sec. 6663 2007 $48,953 $30,536 2008 18,439 13,201 In docket No. 15151-13 respondent determined against petitioner Tran deficiencies, additions to tax, and penalties as follows: Sec. 6662(a) Sec. Sec. Sec. (alternative Year Deficiency 6651(a)(2) 6651(

Finally, the notice determined that petitioner is liable for section 6663 fraud penalties of$47,217.75, $65,187.75, and $18,438, respectively, for the years in issue.

Section 6663(a) Penalties Respondent argues that petitioners are liable for the section 6663 fraud penalties for the years in issue.

MEMORANDUMFINDINGS OF FACT AND OPINION VASQUEZ, Judge: Respondent determined deficiencies of$856,243 and $370,348 in and section 6663 civil fraud penalties of$642,182 and $277,761 with SERVED APR - 6 2015 [*2] respect tb petitioners' Federal income tax for 1999 and 2000, respectively.' The issues for decision are: (1) whetherthe statute oflimitations bars the assessment and collection ofdeficiencies in income tax and additions to tax for 1999 and 2000; (2) whether S

Fraudulent Intent In determining whether a taxpayerhad the requisite fraudulent intent for imposition ofthe section 6651(f) addition to tax, we consider the same elements that we consider in imposing the fraud penalty under section 6663 and former section 6653(b)(1).

eing to deficiencies and civil fraud penalties relating to their wages that had been diverted to Administar during this period. The deficiencies and fraud penalties to which petitioner and Mrs. Williams agreed are as follows: Penalty Year Deficiency sec. 6663 2000 $10,008 $7,506 2001 10,946 8,208 2002 7,863 5,897 2003 4,724 3,543 - 7 - [*7] Petitioner testified that he did not have assistance ofcounsel when he signed the Form 4549. He testified that he signed this Form after Mrs. Williams told h

r, for petitioner. Carina J. Campobasso and Kimberly A. Kazda, for respondent. MEMORANDUM FINDINGS OF FACT AND OPINION COHEN, Judge: Respondent determined deficiencies and penalties as follows: SERVED Sep 14 2015 - 2 - Penalty [*2] Year Deficiency sec. 6663 1999 $851,574 $638,680.50 2000 1,402,030 1,051,522.50 2001 1,078,565 808,923.75 2002 1,455,383 1,091,537.25 2003 977,921 733,440.75 2004 1,154,302 865,726.50 2005 1,042,719 782,039.25 2006 1,598,974 1,199,230.50 2007 1,544,646 1,117,893.75 20

With respect to fraud penalties under section 6663, respondent bears the burden ofproofby clear and convincing evidence.

With respect to fraud penalties under section 6663, respondent bears the burden ofproofby clear and convincing evidence.

amended answerthat alleged increased deficiencies for certain years. In docketNo. 12808-09, respondent determined against Frank Worth deficiencies and fraud penalties, subsequently amended, as follows: Notice ofdeficiency As amended Year Deficiency Sec. 6663 Deficiency Sec. 6663 1998 $63,689 $47,767 $73,403 $55,052 2All statutory references are to the Internal Revenue Code in effect for the years in issue, and all Rule references are to the Tax Court Rules ofPractice and Procedure. We round all

nvincing evidence. See sec. 7454(a); Rule 142(b). In applying section 6651(f) to determine whetherpetitioner's failure to file tax returns was fraudulent, we consider the same elements considered in cases involving former section 6653(b) and present section 6663. See Clayton v. Commissioner, 102 T.C. 632, 653 (1994); Niedringhaus v. Commissioner, 99 T.C. 202, 211-213 (1992). Fraud may be proved by circumstantial evidence, and the taxpayer's entire course ofconduct may establish the requisite fra

amended answerthat alleged increased deficiencies for certain years. In docketNo. 12808-09, respondent determined against Frank Worth deficiencies and fraud penalties, subsequently amended, as follows: Notice ofdeficiency As amended Year Deficiency Sec. 6663 Deficiency Sec. 6663 1998 $63,689 $47,767 $73,403 $55,052 2All statutory references are to the Internal Revenue Code in effect for the years in issue, and all Rule references are to the Tax Court Rules ofPractice and Procedure. We round all

company and their sons received a disproportionatelyhigh number ofshares. After examining the merger, R issued notices ofdeficiency to Ps determining for each a gifttax liability and an I.R.C. sec. 6651 failure-to-file addition to tax (as well as an I.R.C. sec. 6663 fraud penalty that R eventually conceded). Ps timely petitioned this Court for redetermination. Respondent later conceded the fraud penalties and asserted, in the alternative, accuracy-relatedpenalties under I.R.C. sec. 6662(a). Held

Respondent issued a notice ofdeficiency (notice) to petitionerwith respect to his taxable years 2005, 2006, 2007, and 2008.5 In that notice, respondent determined the following deficiency in, and fraud penalties under section 6663 on, petitioner's tax: Taxable Year Deficiency Fraud Penalty 2005 -0- $28,062.00 2006 -0- 48,853.00 2007 -0- 39,685.00 2008 $65,308 48,217.50 This case was called from the calendar (calendar call) at the trial session of the Court that began on October 28, 2013, in Chic

TES TAX COURT DAVID L. CARREON, ET AL.,' Petitioners v. COMMISSIONEROF INTERNAL REVENUE, Respondent DocketNos. 22720-11, 22729-11, Filed January 9, 2014. 22747-11, 22871-11. R determined that Ps were engaged in a civil fraud scheme and liable forthe I.R.C. sec. 6663 75% civil fraud penalty for the tax years at issue. Held: R did not prove by clear and convincing evidence that Ps' underpayments were attributable to fraud. Accordingly, Ps are not liable forthe I.R.C. sec. 6663 civil fraud penalty.

TES TAX COURT DAVID L. CARREON, ET AL.,' Petitioners v. COMMISSIONEROF INTERNAL REVENUE, Respondent DocketNos. 22720-11, 22729-11, Filed January 9, 2014. 22747-11, 22871-11. R determined that Ps were engaged in a civil fraud scheme and liable forthe I.R.C. sec. 6663 75% civil fraud penalty for the tax years at issue. Held: R did not prove by clear and convincing evidence that Ps' underpayments were attributable to fraud. Accordingly, Ps are not liable forthe I.R.C. sec. 6663 civil fraud penalty.

company and their sons received a disproportionatelyhigh number ofshares. After examining the merger, R issued notices ofdeficiency to Ps determining for each a gifttax liability and an I.R.C. sec. 6651 failure-to-file addition to tax (as well as an I.R.C. sec. 6663 fraud penalty that R eventually conceded). Ps timely petitioned this Court for redetermination. Respondent later conceded the fraud penalties and asserted, in the alternative, accuracy-relatedpenalties under I.R.C. sec. 6662(a). Held

amended answerthat alleged increased deficiencies for certain years. In docketNo. 12808-09, respondent determined against Frank Worth deficiencies and fraud penalties, subsequently amended, as follows: Notice ofdeficiency As amended Year Deficiency Sec. 6663 Deficiency Sec. 6663 1998 $63,689 $47,767 $73,403 $55,052 2All statutory references are to the Internal Revenue Code in effect for the years in issue, and all Rule references are to the Tax Court Rules ofPractice and Procedure. We round all

TES TAX COURT DAVID L. CARREON, ET AL.,' Petitioners v. COMMISSIONEROF INTERNAL REVENUE, Respondent DocketNos. 22720-11, 22729-11, Filed January 9, 2014. 22747-11, 22871-11. R determined that Ps were engaged in a civil fraud scheme and liable forthe I.R.C. sec. 6663 75% civil fraud penalty for the tax years at issue. Held: R did not prove by clear and convincing evidence that Ps' underpayments were attributable to fraud. Accordingly, Ps are not liable forthe I.R.C. sec. 6663 civil fraud penalty.

Laciny was liable for the section 6663 fraud penalty and that Mr.

nded to evade tax. See sec. 7454(a); Rule 142(b); Clayton v. Commissioner, 102 T.C. 632, 652-653 (1994) ("[T]o determine whether petitioners' failure to file * * * was fraudulent, we must consider the same elements as is done when considering * * * section 6663."). Petitioner submitted false tax forms (i.e., on which he reported no tax liability) with the intent to conceal, mislead, and prevent the collection.oftax. See Bradford v. Commissioner, 796 F.2d 303, 307-308 (9th Cir. 1986), aff'g T.C.

In deciding whether a failure to file is fraudulent under section 6651(f), we consider the same elements that are considered in imposing the addition to tax for fraud under section 6663 and former section 6653(b).

NDUMFINDINGS OF FACT AND OPINION KERRIGAN, Judge: In these consolidated cases respondent determined the following deficiencies, penalties, and additions to tax: $9tVED MAY 2 9 2013 - 2 - [*2] Additions to tax Penalty Year Deficiency sec. 6651(a)(1) sec. 6663 2002 $426,983 --- $320,237 2003 357,051 --- 267,788 2004 608,247 · --- 452,991 2005 1,133,907 $283,121 . 851,968 2006 1,092,585 272,911 820,280 2007 1,082,079 --- 827,927 In the answer, respondent asserted increased deficiencies and increase

(The parties later filed a stipulation ofsettled issues that adjusted the Browns' income upwards ofover $50 million, approximately $10 million ofwhich was "subject to an addition to tax" for fraud under section 6663, resulting in taxes and penalties ofover $20 million.) 14 All section references are to the Internal Revenue Code in effect at all relevant times, unless otherwise indicated.

- 15 - [*15] The definition offraud for purposes ofthe section 6501(c) period of limitations on assessment is the same as the definition offraud for purposes ofthe section 6663 fraud penalty.

A. Sultan and Miriam Akhter, pro sese. Michael A. Raiken, for respondent. MEMORANDUM OPINION GERBER, Judge: Respondent determined income tax deficiencies and penalties as follows: SERVED DEC 1 2 200 - 2 - [*2] Penalties Year Deficiency Sec. 6662(a) Sec. 6663 2007 $133,527 $784.00 $1,315.40 2008 118,156 97,205.25 83,684.25 Respondent's motion for partial summaryjudgment was filed June 13, 2013. On June 17, 2013, the Court ordered petitioners to file an objection, ifany, to respondent's motion on

(The parties later filed a stipulation ofsettled issues that adjusted the Browns' income upwards ofover $50 million, approximately $10 million ofwhich was "subject to an addition to tax" for fraud under section 6663, resulting in taxes and penalties ofover $20 million.) 14 All section references are to the Internal Revenue Code in effect at all relevant times, unless otherwise indicated.

- 15 - [*15] The definition offraud for purposes ofthe section 6501(c) period of limitations on assessment is the same as the definition offraud for purposes ofthe section 6663 fraud penalty.

(The parties later filed a stipulation ofsettled issues that adjusted the Browns' income upwards ofover $50 million, approximately $10 million ofwhich was "subject to an addition to tax" for fraud under section 6663, resulting in taxes and penalties ofover $20 million.) 14 All section references are to the Internal Revenue Code in effect at all relevant times, unless otherwise indicated.

all Rule references are to the Tax Court Rules ofPractice and Procedure. 2 Respondent argues that ifpetitioner is not liable for an addition to tax under sec. 6651(f) for fraudulent failure to file a return, he is liable for the fraud penalty under sec. 6663 or, alternatively, for the accuracy-relatedpenalty under sec. 6662. 3 At trial respondentmade an oral motion to impose a penalty under sec. 6673. - 3 - income, taxable income, and total tax. Petitioner attached a Form 4852, Substitute for F

espondent determined a $355,447 deficiency in petitioners' Federal income tax for 2000 and an $88,816.50 addition to tax under section 6651(a)(1). Respondent also determined a $226,585.25 fraud penalty against Richard H. Philpott (petitioner) under section 6663. Unless otherwise SERVED Nov 05 2012 - 2 - [*2] indicated, all section references are to the Internal Revenue Code for the year in issue, and all Rule references are to the Tax Court Rules ofPractice and Procedure. The applicability, but

Respondent issued a notice ofdeficiency to petitioners in which he determined deficiencies of$8,392 and $4,4711 for 2005 and 2006, respectively, as well as section 6663 fraud penalties of$5,964 and $3,239 against William Porch (petitioner) for 2005 and 2006, respectively.

Application ofthe Section 6663 Civil Fraud Penalty .

31, 39 (2001), and his burden here is the same as his burden under section 6663 to prove applicability ofthe civil fraud penalty (which is also at issue), see, e.g., Browning v.

he was unemployed.2 '(...continued) in its amended answer, (1) that ifthe additions to tax under sec. 6651(f) do not apply because the Court determines that Huminski filed valid returns, then Huminski should be held liable for additions to tax under sec. 6663, and (2) that ifthe Court determines that the additions to tax under sec. 6651(f) do not apply because the Court determines that Huminski filed valid returns, and that additions to tax under sec. 6663 do not apply because fraud is not prese

-3- [*3] addition to tax under section 6654 for failure to make estimated tax payments for tax years 2003 and 2004; (5) whether, ifpetitioner is not liable under section 6651(f), petitioner is liable for a fraud penalty under section 6663 or an accuracy- related penalty for negligence under section 6662(a) for tax years 2003 and 2004; and (6) whether petitioner is liable for a penalty under section 6673.

A fraud determination fo purposes ofthe section 6501(c) period of limitations on assessment is the same as assessing a taxpayer's liability for the section 6663 fraud penalty.

In ascertaining whether petitioner's failure to file was fraudulent under section 6651(f), the Court considers the same elements that are considered in imposing the fraud penalty under section 6663 and former section 6653(b).

A fraud determination fo purposes ofthe section 6501(c) period of limitations on assessment is the same as assessing a taxpayer's liability for the section 6663 fraud penalty.

-3- [*3] addition to tax under section 6654 for failure to make estimated tax payments for tax years 2003 and 2004; (5) whether, ifpetitioner is not liable under section 6651(f), petitioner is liable for a fraud penalty under section 6663 or an accuracy- related penalty for negligence under section 6662(a) for tax years 2003 and 2004; and (6) whether petitioner is liable for a penalty under section 6673.

On September 9, 1997, respondent assessed an income tax deficiency of.$14,445, a section 6663 penalty of $9,639, and 3Mrs.

asn't a. partnership item" or a penalty that related to an adjustment to a "(...continued) evasion under section 7201, he is collaterally estopped from denying the existence of fraud with regards to any civil penalties the Commissioner asserts under section 6663. See, e.g., DiLeo v. Commissioner, 96 T.C. 858, 885 (1991), affd. 959 F.2d 16 (2d Cir. 1992). We don't lose jurisdiction despite the lack of triable factual issues with regard to imposing the fraud penalty, but rather find for the Commis

Section 6663(a) Penalty Section 6663 (a) provides: "If any part Òf 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 IRS has the burden of proving that a taxpayer is liable for the section 6663 (a) penalty by clear

MEMORANDUM FINDINGS OF FACT AND OPINION FOLEY, Judge: After concessions, the issues for decision are whether petitioner is liable for a section 6663 (a)1 fraud penalty with respect to his 1998 underpayment of tax and whether 1Unless otherwise indicated, all section references are to the Internal Revenue Code in effect for the year in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure .

DeVries' failure to file timely was fraudulent within the meaning of section 6651(f).

In ascertaining whether petitioner's failure to file was fraudulent under section 6651(f), the Court considers the same elements that are considered in imposing the fraud penalty under section 6663 and former section 6653 (b).

ay 16, 2011. F. Jeffrey Rahall, pro se. Michael D. Zima, for respondent. MEMORANDUM FINDINGS OF FACT AND OPINION COHEN, Judge: Respondent determined deficiencies, penalties, and additions to tax as follows: Docket No. 6028-06 Penalty Year Deficiency Sec. 6663 1999 $343,344 $257,508.00 2000 965,278 723,958.50 - 2 - Docket No. 21710-07 Penalty Addition to Tax Year Deficiency Sec. 6663 Sec. 6651(a) (1) 2001 $986,869 $740,151.75 $246,717.25 2002 1,280,782 960,586.50 320,195.50 2003 1,013,949 760,461

eturn should be considered-fraudulent. « In deciding whether a failure to file is fraudulent under section 6651(f), we consider the same elements that are considered in imposing the addition to tax. for fraud under former section 6653(b) and present section 6663. Clayton v. Commissioner, 102 T.C. 632, 653 (1994). Fraud is defined as an intentional.wrongdoing designed to evade tax believed to be owing. Powell v. Granquist, 252 F.2d 56 (9th Cir. 1958); Miller v. Commissioner, 94 T.C. 316, 332 (199

ay 16, 2011. F. Jeffrey Rahall, pro se. Michael D. Zima, for respondent. MEMORANDUM FINDINGS OF FACT AND OPINION COHEN, Judge: Respondent determined deficiencies, penalties, and additions to tax as follows: Docket No. 6028-06 Penalty Year Deficiency Sec. 6663 1999 $343, 344 $257, 508 . 00 2000 965,278 723,958.50 - 2 - Docket No. 21710-07 Penalty Addition to Tax Year Deficiency Sec. 6663 Sec. 6651(a) (1) 2001 $986,869 $740,151.75 $246,717.25 2002 1,280,782 960,586.50 320,195.50 2003 1,013,949 760

In applying the penalty-under section 6663, we consider the same elements, or long-recognized "badges of fraud", discussed in cases applying section 6651(f) and former section 6653 (b) (1).

In applying the penalty-under section 6663, we consider the same elements, or long-recognized "badges of fraud", discussed in cases applying section 6651(f) and former section 6653 (b) (1).

h Cir. 1986), affg. T.C. Memo. 1984-601; Profl. Servs. v. Commissioner, 79 T.C. 888, 930 (1982). In determining whether a taxpayer's failure to file is fraudulent, we consider the same elements that are considered in imposing the fraud penalty under section 6663. Clayton v. Commissioner, 102 T.C. - 15 - 632, 653 (1994) . Those two elements of fraud are (1) the existence of an underpayment and (2) fraudulent intent with respect to some portion of the underpayment. See Parks v. Commissioner, 94 T

taxpayer has previously been convicted of a crime involving tax fraud, such as criminal tax evasion under section 7201, he is collaterally estopped from denying the existence of fraud with regard to any civil penalties the Commissioner asserts under section 6663. See, e.g., DiLeo v. Commissioner, 96 T.C. 858, 885 (1991), affd. 959 F.2d 16 (2d Cir. 1992). We don’t lose jurisdiction despite the lack of triable factual issues with regard to imposing the fraud penalty, but rather find for the Commis

Respondent also determ ned penalties for fraud under section 6663 o f SERVED SEP 13 2012 $52,733 .25"and $147,610 .50 against Wayne C .

February 13, 2003, a decision was entered wherein it was determined that petitioners owed deficiencies'and :section 6663 penalties for tax years 1993 and 1994 .

MEMORANDUM FINDINGS OF FACT AND OPINION JACOBS, Judge : Respondent determined a deficiency in Federal estate tax of $11,662,737, and a section 6663 fraud penalty of $8,649,140, against the Estate of Robert C .

As a result, the IRS mailed to each petitioner duplicate joint notices of deficiency dated April 4, 2007, determining Federal income tax deficiencies of $122,055, $76,881, $78,355, and civil fraud penalties under section 6663 of $91,541 .25, $57,660 .75, and $57,603 for 2002, 2003, and 2004, respectively .

Commissioner, supra at 652-653 (the Court considers the same elements to-determine the fraudulent failure to file addition under section 6651(f) as the Court did to determine- the fraud penalty under former section 6653 (b) (present section 6663)); Castillo v.

Respondent also determ ned penalties for fraud under section 6663 o f SERVED SEP 13 2012 $52,733 .25"and $147,610 .50 against Wayne C .

In ascertaining whether petitioner's failure to file was fraudulent pursuant to section 6651(f), the Court considers the same elements that are considered in imposing the fraud penalty under section 6663 and the additions to tax pursuant to former section 6653(b) .

(1) Whether petitioner underreported income during the years in issue ; (2) whether petitioner is liable for the addition to tax for failure to timely pay tax under section 6651(a)(2) ; and (3) whether petitioner is liable for fraud penalties under section 6663 . We will grant respondent's motions for summary judgment as to the deficiencies and fraud penalties, rendering respondent's motions to dismiss moot . We will deny respondent summary judgment on the issue of the addition to tax under sec

husband is liable for the fraud penalty under section 6663 for the 3 years at issue .

Section 6663 (a) provides : "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 5 percent of the portion of the underpayment which is attributab e to fraud . " "Fraud is defined as an intentional wrongdoing designed to evade tax believed to be owing ." Neely .

Fraud Penalty Under Section 666 3 Section 6663 imposes an addition to tax equal to 75 percent of any underpayment attributable to fraud .

S E D OCT - 8 2009 - 2 - section 6663 of $7,431 and $5,801 for 2000 and 2001, respectively .

Fraud Penalty Section 6663 imposes a penalty equal to 75 percent of the underpayment when that underpayment is attributable to fraud .

e of deficiency was issued depends on whether petitioners committed fraud in the filing of their 1996 returns . The determination of fraud for purposes of section 6501(c)(1) is the same as the determination of fraud for purposes of the penalty under section 6663 . Neely - 9 - v. Commissioner , 116 T .C . 79, 85 (2001) ;, Rhone-Poulenc Surfactants & Specialties, L .P . v. Commissioner, 114 T .C . 533 , 548 (2000) . Section 6663(a) provides : "If any part of any underpayment of tax required to be

Whether petitioner underreported income during the years in issue; (2) whether petitioner is liable for the addition to tax for failure to timely file a return under section 6651(a)(1) ; and (3) whether petitioner is liable for fraud penalties under section 6663 . Background On December 16, 2005, respondent sent petitioner notices of deficiency for the 1999 and 2000 tax years . Petitioner filed a petition with this Court on March 15, 2006, challenging the determined deficiencies, 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 .jj': In ascertaining whether petitioner's failure to file was fraudulent under section 6651(f), the Court considers the same elements that are considered in imposing the fraud penalty under section 6663 and former section 6653(b) .

Fraud Penalty Section 6663 imposes a penalty equal to 75 percent of the underpayment when that underpayment is attributable to fraud .

e of deficiency was issued depends on whether petitioners committed fraud in the filing of their 1996 returns . The determination of fraud for purposes of section 6501(c)(1) is the same as the determination of fraud for purposes of the penalty under section 6663 . Neely 9 - v. Commissioner, 116 T .C . 79, 85 (2001) ;'i Rhone-Poulenc Surfactants & Specialties, L .P . v. Commi,lssioner , 114 T .C . 533 , 548 (2000) . Section 6663(a) provides : "If any part of any underpayment of tax required to be

Respondent also determined an $8,130 fraud penalty under section 6663 for 2000, an $18,765 fraud penalty for 2003, and a $61,574 .25 fraud penalty for 2004 .

involve an analysis and findings of "badges of fraud" typically associated with prosecutions under section 7201 of affirmative attempts by taxpayers to engage in willful tax evasion and with determinations of willful civil tax fraud penalties under section 6663. See, e.g., Spies v. United States, 317 U.S. 492, 499 (1943). . Indeed, in this case petitioner filed its corporate Federal income tax returns for 1994 and 1995 without claiming deductions for redemption dividends. At this time no underp

es in 1995, 1996, and 1997 ; (5) whether petitioners are entitled to deductions for self-employed health insurance greater than $343, $543, and $743 for 1995, 1996, and 1997, respectively; (6) whether petitioners are liable for fraud penalties under section 6663 ; and (7) whether petitioners are liable for accuracy-related penalties under section 6662(a) .' For all purposes hereafter, the years at issue shall refer to 1995, 1996, and 1997 .

Respondent assessed the $104,503 deficiency, as well as the section 6663 penalty and $98,497 .14 of interest, on January 10, 2003 .

T .C . 632, 646 (1994) . In determining whether petitioner's failure to file was fraudulent within the meaning o f section 6651(f), we'consider the same elements that are relevant in imposing the penalty for underpayment of tax due to fraud i under section 6663 . Clayton v . Commissioner, supra at 653 ; see 1 also Pappas v . Commissioner , T .C. Memo . 2002-127 . Establishing fraud requires proof that the taxpayer "acted with an intent'to evade paying taxes ; this may be proved, by circumstantia

notice-of t deficiency dated April 8, 1997, at their Slidell address . Respondent determined that petitioner and Ms : Conn received unreported embezzlement income in 1`993 and that petitioner, but not Ms . Conn, was liable for a'fraud-penalty"under section 6663 . Petitioner does not recall receiving`a notice of deficiency for 1993 . Ms . Conn does not recall providing petitioner a copy of the 1993 notice of deficiency at any time between April 8'and July 10, 1997 . In response to the notice of d

District Court for the Northern District o f California for the years 1996, 1998, and 1999 .2 Respondent determined deficiencies in petitioner's Federal income tax totaling $66,828 and civil fraud penalties under section 6663 totaling $50,121 .

2001 $36,013 --- $27,010 2002 ~ 20,976 $5,244 15,732 2003 62,938 3,114 47,20 4 After a,settlement largely in respondent's favor of the income and expense adjustments determined in respondent's notices of deficiency, the issue for decision in these consolidated cases is whether Lowell Alan Baisden (petitioner) is liable„for the fraud penalty under section 6663 or alternatively for th e negligence penalty under section 6662(b)(1) .

involve an analysis and findings of “badges of fraud” typically associated with prosecutions under section 7201 of affirmative attempts by taxpayers to engage in willful tax evasion and with determinations of willful civil tax fraud penalties under section 6663. See, e.g., Spies v. United States, 317 U.S. 492, 499 (1943). Indeed, in this case petitioner filed its corporate Federal income tax returns for 1994 and 1995 without claiming deductions for redemption dividends. At this time no underpay

6662 2002 $1,316 $100 $263 2003 3, 138 628 Subsequent to these concessions, respondent filed an answe r alleging that petitioner is liable for the fraud penalty under - 3 - section 6663(a ) for the years 2002 and 2003 in the amounts of $987 and $2,354 respectively .

Respondent determined the following deficiencies in Federal income tax, additions to tax under section 6651(a)(1) for failure to timely file returns, and penalties under section 6663 for civil tax fraud : Year Tax Additions to tax Penalties Sec .

or their 1993 through 1995 individual taxable years and a 30-day letter for their 1996 individual taxable year. Respondent proposed deficiencies, additions to tax, and penalties as follows:10 Additions to tax Penalty Year Deficiency sec. 6651(a)(1) sec. 6663 1993 $25,046 $2,866 $18,785 1994 31,754 8,019 23,815 1995 74,895 11,277 56,171 1996 33,656 --- 25,242 Respondent, in part, disallowed a number of claimed business expense deductions claimed by petitioners for lack of substantiation and busin

On June 14, 2004, respondent issued 168 Garment a notice of deficiency determining that 168 Garment understated its 2001 gross receipts and was liable for the section 6663 fraud penalty.

On June 14, 2004, respondent issued 168 Garment a notice of deficiency determining that 168 Garment understated its 2001 gross receipts and was liable for the section 6663 fraud penalty.

For this purpose, we consider the same factors under section 6651(f) that are considered in imposing the fraud penalty under section 6663 and former section 6653(b).

Section 6663 imposes a 75-percent penalty on the portion of any underpayment due to fraud . Because these sections are construed similarly as to a determination of a fraudulent intent, we consolidate our discussion of respondent's fraud determinations . -7- See Clayton v. Commissioner , 102 T .C . 632, 653 (1994) ; see also Temple v . Commissioner

We consider the same factors under section 6651(f) that are considered in imposing the fraud penalty under section 6663 and former section 6653(b).

On June 14, 2004, respondent issued 168 Garment a notice of deficiency determining that 168 Garment understated its 2001 gross receipts and was liable for the section 6663 fraud penalty.

He also determined a fraud penalty under section 6663.1 The Chens contest both the deficiency and the penalty.

Respondent also determined fraud penalties under section 6663 for 1990, 1991, 1992, and 1993 of $19,078.50, $2,162.25, $7,412.25, and $26,907, respectively.

In ascertaining whether petitioner's failure to file was fraudulent under section 6651(f), the Court considers the same elements that are considered in imposing the fraud penalty under section 6663 and former section 6653(b).

eficiencies, penalties, and additions with respect to petitioner’s Federal income tax as follows: - 2 - Additions to Tax Year Deficiency Sec. 6653(b)(1) Sec. 6661 1988 $47,881 $37,298 $11,970 Addition to Tax Penalty Year Deficiency Sec. 6651(a)(1) Sec. 6663 1989 $36,620 $5,306 $27,465 Penalty Year Deficiency Sec. 6663 1990 $21,488 $16,116 The issues for decision are: (1) Whether petitioner received unreported constructive dividends from Moran General Contractors, Inc. (the corporation), by diver

After adding section 6663 fraud penalties and interest, the Form 4549-CG shows balances due of $344,498 for 1993, $9,560 for 1994, and $40,657 for 1995.

rmine whether their failure to file timely was fraudulent within the meaning of section 6651(f). In determining whether a taxpayer's failure to file is fraudulent, we consider the same elements that are considered in imposing the fraud penalty under section 6663. Clayton v. Commissioner, 102 T.C. 632, 653 (1994). Fraud is an intentional wrongdoing designed to evade tax known or believed to be owing. Edelson v. Commissioner, 829 F.2d 828, 833 (9th Cir. 1987), affg. T.C. Memo. 1986-223; Bradford v

6663 1989 $23,621 $5,201 $507 $17,716 1990 2,982 671 0 2,237 1991 23,964 5,392 48 17,495 1992 10,728 0 0 8,046 1993 2,674 165 318 2,006 Respondent reflected this determination in two notices of deficiency issued to petitioner on March 25, 2004. Respondent also determined in the notices of deficiency that petitioner is -3- liable under section

for reasons described below. -2- Respondent determined deficiencies in petitioner’s income tax and additions to tax and a penalty for taxable years 1986 to 1990 as follows:1 Additions to tax Penalty Year Deficiency Sec. 6651(a)(1) Sec. 6653(b)(1) Sec. 6663 1986 $152,373 $114,280 1987 10,819 8,115 1988 58,380 -- 43,785 -- 1989 55,509 $5,266 -- $41,632 1990 45,637 34,228 Section references are to the Internal Revenue Code as in effect during the years in issue. Rule references are to the Tax Cour

6663 1992 $10,728 $0 $0 $8,046 1993 2,674 165 318 2,006 Respondent reflected this determination in a single notice of deficiency issued to Hickey on March 25, 2004. Respondent also determined in the notice of deficiency that Hickey is liable under section 6651(a)(2) for an addition to her 1993 tax in an amount to be determined. In answering Hi

understatement and negligence additions to tax under former secs. 6661 and 6653(a) for 1987 and 1988, respectively, and under sec. 6662(a) for 1989 through 1991 as an alternative position if the fraud penalty were not sustained under sec. 6653(b) or sec. 6663 as the case may be. - 3 - brokerage commission rebates claimed for 1987 and 1988; (5) whether petitioner is entitled to defer gain realized from the 1987 sale of a residence under section 1034 and, if not, the amount of gain to be recognize

Respondent determined that the civil fraud penalty under section 6663 was applicable to Ahmed for 1995, 1996, and 1997 and to K & M for 1995 and 1996.

Respondent also determined additions to tax under section 6663 for 1987 and 1988 but has now conceded that those additions to tax are not due.

Johnston and * 1989 $1,546,160 $309,232 $1,159,620 * * Shirley L. Johnston, Deceased Docket No. 26005-96 Thomas E. Johnston 1991 289,396 -- 217,047 Docket No. 2266-97 1992 341,908 -- 256,431 By answer respondent also asserted increased deficiencies and penalties in docket Nos. 26005-96 and 2266-97. These consolidated cases are p

6663 1998 $31,816 $4,063 $8,627 1999 76,768 9,250 22,887 After concessions by the parties, the issue for decision is whether petitioners are entitled to a loss deduction for 1999 for the cash that petitioner Edman Hackworth forfeited to the State of South Carolina as a result of his violation of South Carolina's gambling laws. Unless otherwise

d 1989 as follows:2 Docket No. 3275-01 Additions to Tax Sec. Sec. Sec. Year Deficiency 6653(b)(1)(A) 6653(b)(1)(B) 6653(b) 1987 $20,861 $15,646 50% of the interest -- due on $20,861 1988 3,213 -- -- $2,410 Docket No. 3276-01 Penalty Year Deficiency Sec. 6663 1989 $10,494 $7,871 Docket No. 3277-01 Additions to Tax Sec. Sec. Sec. Year Deficiency 6653(b)(1)(A) 6653(b)(1)(B) 6653(b) 1987 $12,005 $9,004 50% of the interest -- due on $12,005 1988 9,985 -- -- $7,489 The issues remaining to be decided a

d 1989 as follows:2 Docket No. 3275-01 Additions to Tax Sec. Sec. Sec. Year Deficiency 6653(b)(1)(A) 6653(b)(1)(B) 6653(b) 1987 $20,861 $15,646 50% of the interest -- due on $20,861 1988 3,213 -- -- $2,410 Docket No. 3276-01 Penalty Year Deficiency Sec. 6663 1989 $10,494 $7,871 Docket No. 3277-01 Additions to Tax Sec. Sec. Sec. Year Deficiency 6653(b)(1)(A) 6653(b)(1)(B) 6653(b) 1987 $12,005 $9,004 50% of the interest -- due on $12,005 1988 9,985 -- -- $7,489 The issues remaining to be decided a

ermine whether his failure to file timely was fraudulent within the meaning of section 6651(f). In determining whether a taxpayer’s failure to file is fraudulent, we consider the same elements that are considered in imposing the fraud penalty under section 6663. Clayton v. Commissioner, 102 T.C. 632, 653 (1994). Fraud is an intentional wrongdoing designed to evade tax known or believed to be owing. Edelson v. Commissioner, 829 F.2d 828, 833 (9th Cir. 1987), affg. T.C. Memo. 1986-223; Bradford v.

- 5 - On December 29, 1997, respondent issued a notice of deficiency to petitioner determining fraud penalties under section 6663 for 1992 and 1993.

d 1989 as follows:2 Docket No. 3275-01 Additions to Tax Sec. Sec. Sec. Year Deficiency 6653(b)(1)(A) 6653(b)(1)(B) 6653(b) 1987 $20,861 $15,646 50% of the interest -- due on $20,861 1988 3,213 -- -- $2,410 Docket No. 3276-01 Penalty Year Deficiency Sec. 6663 1989 $10,494 $7,871 Docket No. 3277-01 Additions to Tax Sec. Sec. Sec. Year Deficiency 6653(b)(1)(A) 6653(b)(1)(B) 6653(b) 1987 $12,005 $9,004 50% of the interest -- due on $12,005 1988 9,985 -- -- $7,489 The issues remaining to be decided a

ourt, and this opinion should not be cited as authority. In a notice of deficiency mailed on April 13, 2001, respondent determined deficiencies in petitioner’s Federal income taxes and imposed penalties as follows: Year Deficiency Sec. 6662 Penalty Sec. 6663 Penalty 1993 $9,177 --- $6,882.75 1994 5,701 $1,140.20 4,275.75 1995 4,172 834.40 3,129.00 Different amounts are asserted in respondent’s amended answer. After discovery of unspecified errors in the calculations of those amounts, the parties

By notice dated December 8, 1999, respondent determined additions to tax and section 6663¹ penalties in petitioners' 1995 and 1996 Federal income taxes.

By notice of deficiency dated April 15, 1999 (the notice), respondent determined deficiencies in and additions to petitioner’s Federal income tax liabilities as follows: - 3 - Tax Year Ending Additions to Tax December 31 Deficiency Sec. 6651(a)(1) Sec. 6663* 1989 $127,879 $31,970 $95,909 1990 204,353 51,088 153,265 * In the event that petitioner is not held liable for the sec. 6663 fraud penalty, respondent made the alternative determination that the underpayments of tax for 1989 and 1990 are s

Kaufman) - 2 - was liable for section 6663 fraud penalties of $4,909.50 for 1993, $8,682.75 for 1994, and $13,669.50 for 1995.

hat petitioners James J. Coyle (Mr. Coyle) and Regal Mobile Home Sales, Inc. (Regal), in these consolidated cases are liable for deficiencies, an addition to tax, and penalties as follows: James J. Coyle, docket No. 12012-99S Penalty Year Deficiency Sec. 6663 1992 $9,983 $7,487 1993 5,284 3,962 Regal Mobile Home Sales, Inc., docket No. 12061-99S Addition to Tax Penalty Year Deficiency Sec. 6651(a)(1) Sec. 6663 3/31/90 $2,850 – $2,138 3/31/92 3,690 – 2,768 3/31/93 3,526 – 2,645 3/31/94 3,607 $902

t No. 2266-97; and Eric T. Johnston, docket No. 12736-97. - 2 - OPINION NIMS, Judge: Respondent determined the following deficiencies and penalties with respect to petitioners’ Federal income taxes: Penalties Petitioner Year Deficiency Sec. 6662(a) Sec. 6663 Thomas E. Johnston and * 1989 $1,546,160 $309,232 $1,159,620 * * Shirley L. Johnston, Deceased Docket No. 26005-96 Thomas E. Johnston 1991 289,396 -- 217,047 Docket No. 2266-97 1992 341,908 -- 256,431 Eric T. Johnston 1989 165,067 33,013 --

, 102 T.C. 632, 646 (1994). In determining whether petitioner’s failure to file was fraudulent within the meaning of section 6651(f), we consider the same elements that are relevant in imposing the penalty for underpayment of tax due to fraud under section 6663. Clayton v. Commissioner, supra at 653. Establishing fraud requires proof that the taxpayer “acted with an intent to evade paying taxes” and may be proved by circumstantial evidence. Douge v. Commissioner, 899 F.2d 164, 168 (2d Cir. 1990)

Section 6663 imposes a penalty if any part of any underpayment of tax required to be shown on a return is due to fraud. Section 7454(a) and Rule 142(b) provide that, in any case involving the issue of fraud, the burden of proof in respect to that issue is on the Commissioner. The Commissioner usually determines the fraud penalty in the notice of de

hat petitioners James J. Coyle (Mr. Coyle) and Regal Mobile Home Sales, Inc. (Regal), in these consolidated cases are liable for deficiencies, an addition to tax, and penalties as follows: James J. Coyle, docket No. 12012-99S Penalty Year Deficiency Sec. 6663 1992 $9,983 $7,487 1993 5,284 3,962 Regal Mobile Home Sales, Inc., docket No. 12061-99S Addition to Tax Penalty Year Deficiency Sec. 6651(a)(1) Sec. 6663 3/31/90 $2,850 – $2,138 3/31/92 3,690 – 2,768 3/31/93 3,526 – 2,645 3/31/94 3,607 $902

RANDUM FINDINGS OF FACT AND OPINION BEGHE, Judge: Respondent determined the following deficiencies and fraud addition to tax and penalties with respect to petitioner’s Federal income taxes: - 2 - Addition to Tax Penalty Year Deficiency Sec. 6653(b) Sec. 6663 1988 $35,523 $26,642 --- 1989 17,502 --- $13,127 1990 29,203 --- 21,902 Unless otherwise indicated, all section references are to the Internal Revenue Code in effect for the years at issue, and all Rule references are to the Tax Court Rules

nued) deficiencies for the 1987 and 1988 taxable years. 4 Amounts are rounded to the nearest dollar amount. 5 Within the Stipulation of Settlement, Dr. Alt also agreed that he was liable for a $479,404 deficiency and a $359,553 addition to tax under sec. 6663 for the 1989 taxable year. - 8 - 6653(b)(2), and to the taxable years 1986 and 1987 under sec. 6653(b)(1)(B). On April 27, 1993, the Court entered a decision pursuant to this stipulation of settlement. In March 1994, on the basis of the rev

sions, the issues for decision are: (1) Whether petitioners realized net income for taxable years 1993 and 1995 in excess of amounts reported on their returns; (2) whether petitioner Monty Bisceglia (petitioner) is liable for the fraud penalty under section 6663 for taxable years 1993 and 1995; and (3) whether (in the alternative to the fraud penalty for - 3 - petitioner) petitioners are liable for section 6662(a) accuracy- related penalties for taxable years 1993 and 1995.2 FINDINGS OF FACT The

The issues for decision are (1) whether respondent’s assertion of the fraud penalty under section 6663 was substantially justified within the meaning of section - 3 - 7430(c)(4)(B)(i); and, if not, (2) whether respondent’s disparate treatment of petitioner and her ex-husband with respect to the fraud penalty constitutes a special factor within the meaning of section 7430(c)(1)(B)(iii); and (3) the amount of costs petitioner is entitled

In the notice, respondent determined a deficiency of $30,490 in petitioner’s income tax for 1992, an addition to tax under section 6654 of $1,330, and an accuracy- related penalty for fraud under section 6663 of $22,868.

ditions to tax, and penalties as follows:3 Additions to Tax and Penalties Year Deficiency Sec. 6653 (b) (1) (A) Sec. 6653 (b) (1) (B) Sec. 6661 1987 $173,817 $130,363 ¹ $43,454 Sec. 6653(b)(1) Sec. 6661 1988 53,937 $40,453 $13,484 -- Sec. 6651(a)(1) Sec. 6663 1989 73,279 $13,792 $54,959 -- Sec. 6654 Sec. 6662(c) 1990 124,891 $8,057 $24,978 -- ¹50 percent of the interest due on $173,817. Petitioner and Mr. Rowe timely filed petitions with this Court on September 27, 1993, and November 18, 1994, r

6663 1988 $112,324 $83,393.25 50% of the interest –- -– -- due on $111,191 1989 186,457 -- –- $136,207.50 $46,614.25 -- 1990 160,854 -- –- –- –- $14,889.75 Unless otherwise indicated, all section references are to the Internal Revenue Code in effect for the years in issue, and all Rule references are to the Tax Court Rules of Practice and Proc

for petitioners. Rosemarie D. Camacho,. for respondent. MEMORANDUM FINDINGS OF FACT AND OPINION SWIFT, Judge: Respondent determined deficiencies in petitioners' Federal income tax liabilities and penalties, as follows: Fraud Penalty Year Deficiency Sec. 6663 1990 $ 2,108 $ 1,581 1991 10,063 7,547 1992 11,136 8,352 1993 13,411 10,058 SERVED JANJA19E - 2 - After settlement, the only issue for decision¹ is whether petitioner Howard Levine is liable for the fraud penalties for 1990, 1991, and 1992.

6663, the successor to sec. 6653(b)(1), is applicable to returns the due date for which (determined without regard to extensions) is after Dec. 31, 1989. Omnibus Budget Reconciliation Act of 1989, Pub. L. 101-239, sec. 7721(a), (c), (d), 103 Stat. 2106, 2395-2400. Sec. 6072(b) provides that a return of a corporation made on the basis of a fisc

6663, the successor to sec. 6653(b)(1), is applicable to returns the due date for which (determined without regard to extensions) is after Dec. 31, 1989. Omnibus Budget Reconciliation Act of 1989, Pub. L. 101-239, sec. 7721(a), (c), (d), 103 Stat. 2106, 2395-2400. Sec. 6072(b) provides that a return of a corporation made on the basis of a fisc

es, additions to tax, and penalties as follows:3 Additions to Tax and Penalties Year Deficiency Sec. 6653(b)(1)(A) Sec. 6653(b)(1)(B) Sec. 6661 1987 $173,817 $130,363 $43,454 1 Sec. 6653(b)(1) Sec. 6661 1988 53,937 $40,453 $13,484 -- Sec. 6651(a)(1) Sec. 6663 1989 73,279 $13,792 $54,959 -- Sec. 6654 Sec. 6662(c) 1990 124,891 $8,057 $24,978 -- 150 percent of the interest due on $173,817. Petitioner and Mr. Rowe timely filed petitions with this Court on September 27, 1993, and November 18, 1994, r

. Holser, for respondent. MEMORANDUM FINDINGS OF FACT AND OPINION GERBER, Judge: Respondent determined deficiencies in, additions to, and penalties on petitioners’ Federal income tax as follows: - 2 - Charles Y. Choi Addition to Tax Year Deficiency Sec. 6663 1991 $59,106 $44,330 Charles Y. and Jin Yi Choi Additions to Tax and Penalties Year Deficiency Sec. 6651(a)(1) Sec. 6663 1992 $49,624 -— $37,218 1993 34,177 $39,613 25,633 The issues remaining for our consideration are: (1) Whether Charles Y

6663 1988 $112,324 $83,393.25 50% of the interest –- -– -- due on $111,191 1989 186,457 -- –- $136,207.50 $46,614.25 -- 1990 160,854 -- –- –- –- $14,889.75 Unless otherwise indicated, all section references are to the Internal Revenue Code in effect for the years in issue, and all Rule references are to the Tax Court Rules of Practice and Proc

Rules of Practice and Procedure. Monetary amounts are rounded to the nearest dollar. - 3 - Docket No. 5508-99 Eddie Cordes, Inc. Successor by Merger with Cordes Finance Corp.: Accuracy-related Fraud penalties penalties Year Deficiency sec. 6662(a) sec. 6663 1994 $328,625 -0- $246,654 1995 298,393 $59,861 (685) Docket No. 7369-99 Edmund J. and June J. Cordes: Accuracy-related Fraud penalties penalties Year Deficiency sec. 6662(a) sec. 6663 1994 $1,806,379 $211,212 $562,739 1995 1,162,589 108,851

Rules of Practice and Procedure. Monetary amounts are rounded to the nearest dollar. - 3 - Docket No. 5508-99 Eddie Cordes, Inc. Successor by Merger with Cordes Finance Corp.: Accuracy-related Fraud penalties penalties Year Deficiency sec. 6662(a) sec. 6663 1994 $328,625 -0- $246,654 1995 298,393 $59,861 (685) Docket No. 7369-99 Edmund J. and June J. Cordes: Accuracy-related Fraud penalties penalties Year Deficiency sec. 6662(a) sec. 6663 1994 $1,806,379 $211,212 $562,739 1995 1,162,589 108,851

Johnston determine deficiencies and section 6663 fraud penalties for each of the years 1989, 1991, and 1992.

garding increases in the deficiencies for the 1987 and 1988 taxable years. Amounts are rounded to the nearest dollar. Within the stipulation of settlement, Dr. Alt also agreed that he was liable for a $479,404 deficiency and a $359,553 penalty under sec. 6663 for the 1989 taxable year. In 1990, Karen and Dr. Alt were indicted on five counts of Federal tax violations under sec. 7201, including attempted evasion, and aiding and abetting in the attempted evasion, of personal and corporate income ta

Rules of Practice and Procedure. Monetary amounts are rounded to the nearest dollar. - 3 - Docket No. 5508-99 Eddie Cordes, Inc. Successor by Merger with Cordes Finance Corp.: Accuracy-related Fraud penalties penalties Year Deficiency sec. 6662(a) sec. 6663 1994 $328,625 -0- $246,654 1995 298,393 $59,861 (685) Docket No. 7369-99 Edmund J. and June J. Cordes: Accuracy-related Fraud penalties penalties Year Deficiency sec. 6662(a) sec. 6663 1994 $1,806,379 $211,212 $562,739 1995 1,162,589 108,851

Section 6663 imposes a penalty if any part of any underpayment of tax required to be shown on a return is due to fraud. Section 7454(a) and Rule 142(b) provide that, in any case involving the issue of fraud, the burden of proof in respect to that issue is on the Commissioner. The Commissioner usually determines the fraud penalty in the notice of de

Respondent attached to the notice of determination a schedule detailing the proposed additional employment taxes.6 Respondent also asserted a section 6663 fraud penalty with respect to such additional taxes.

ported net income in 1991, 1992, and 1993, from his business of dealing in used automobile parts, consisting primarily of payments from a company referred to as BMAP, that he is subject to self- employment tax on the unreported net income of his used - 3 - automobile parts business, that the returns at issue are subject to the fraud penalty under section 6663, and that some part of the underpayment for 1993 is due to the fraud of Mrs.

To reflect the foregoing and respondent’s concession of the section 6663 penalty for each year, An appropriate order will be issued, and decision will be entered under Rule 155.

Additions to tax, like those imposed for fraud under former section 6653(b) and section 6663 and for failure to file timely and to pay timely under section 6651(a)(1) and (2), are remedial, and not punitive.

a penalty has been imposed at a 40 percent rate (i.e., a penalty for a gross valuation misstatement under sections 6662(b)(3) and (h)). (4) Those with respect to which a penalty has been imposed at a 75 percent rate (i.e., a penalty for fraud under section 6663). [Sec. 1.6664-3(b), Income Tax Regs.] Examples under the regulations, and our opinion in Lemishow v. Commissioner, 110 T.C. 346 (1998), illustrate how the regulations would apply to the cases at hand. Step 1 is to determine the portion,

y Howard S. Kleyman, who entered his appearance shortly before the trial date and withdrew as attorney of record immediately after the trial. - 2 - petitioner’s Federal income taxes:2 Addition to Tax Civil Fraud Penalty Year Deficiency Sec. 6654(a) Sec. 6663 1989 $ 84,472 $5,708 $ 63,354 1990 95,905 6,343 71,929 1991 153,032 8,702 114,774 After concessions by both parties,3 the issues for decision are: (1) Whether petitioner is entitled to deductions for aviation-related expenses, not previously

1986. 2. Held, further, Ps are liable for an addition to tax for negligence for 1993. See sec. 6662(a), I.R.C. 1986. 3. Held, further, amounts of deficiencies redetermined. - 2 - Benson S. Goldstein, for petitioners. Judith C. Cohen, for respondent. MEMORANDUM FINDINGS OF FACT AND OPINION CHABOT, Judge: Respondent determined defi

a penalty has been imposed at a 40 percent rate (i.e., a penalty for a gross valuation misstatement under sections 6662(b)(3) and (h)). (4) Those with respect to which a penalty has been imposed at a 75 percent rate (i.e., a penalty for fraud under section 6663). [Sec. 1.6664-3(b), Income Tax Regs.] Examples under the regulations, and our opinion in Lemishow v. Commissioner, 110 T.C. 346 (1998), illustrate how the regulations would apply to the cases at hand. Step 1 is to determine the portion,

re. After conceding certain items, respondent determined that petitioner is liable for deficiencies in income tax, an addition to tax, and penalties for the years and in the amounts as follows: Addition to Tax Penalty Year Deficiency Sec. 6653(b)(1) Sec. 6663 1988 $30,660 $22,995 -- 1989 33,549 -- $25,162 1990 9,280 -- 6,960 1991 37,835 -- 28,376 The issues to be decided are: (1) Whether petitioner had unreported income for the taxable years in issue as determined by respondent; and (2) whether

Respondent also asserted a section 6663 fraud penalty with respect to such additional taxes.

ned unreported net income in 1991, 1992, and 1993, from his business of dealing in used automobile parts, consisting primarily of payments from a company referred to as BMAP, that he is subject to self-employment tax on the unreported net income of his used automobile parts business, that the returns at issue are subject to the fraud penalty under section 6663, and that some part of the underpayment for 1993 is due to the fraud of Mrs.

The definition of fraud for purposes of section 6501(c)(1) is the same as the definition of fraud for purposes of section 6663 (which imposes a penalty for fraud).

439 (1954); (3) $1,743 in section 6656 penalties for failure to make timely deposits of taxes; and (4) $24,911 in section 6663 fraud penalties.

ND OPINION SWIFT, Judge: Respondent determined deficiencies in petitioner's Federal income taxes, additions to tax, and penalties as follows: - 2 - Additions to Tax and Penalties Year Deficiency Sec. 6653(b)(1)(A) Sec. 6653(b)(1)(B) Sec. 6653(b)(1) Sec. 6663 1986 $25,086 $18,815 * --- --- 1987 20,122 15,092 * --- --- 1988 26,970 --- --- $20,228 --- 1989 44,426 --- --- --- $33,320 1990 62,817 --- --- --- 47,113 1991 38,498 --- --- --- 28,874 * Amounts to be calculated at 50 percent of interest du

- 24 - Fraud Respondent also determined that petitioners are liable for (i) additions to tax for fraud under section 6653(b)(1)(A) and (B) for 1987, (ii) an addition to tax for fraud under section 6653(b) for 1988, and (iii) a penalty for fraud under section 6663 for 1989, 1990, and 1991.

6663 Theron Livingston, Sr. 1989 $3,424 $856 $232 — Theron and Michele Livingston 1990 $24,676 --- — $18,507 After concessions,1 the issues for decision are: (1) Whether Theron Livingston, Sr. (petitioner husband), had $14,690 of unreported income in taxable year 1989 as determined by respondent’s income reconstruction using the net worth meth

llows: 1(...continued) to the Internal Revenue Code in effect for the taxable years in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure. - 3 - Addition to Tax Penalties Year Deficiency Sec. 6651(a)(1) Sec. 6662(a) Sec. 6663 1991 $3,759 -– $751.80 -- 1992 162,222 $23,343.45 5,393.40 $101,441.25 1993 112,951 26,206.25 4,181.00 69,034.50 1994 26,337 2,082.50 2,505.00 10,359.00 The adjustments contained in the notice of deficiency resulted primarily from respondent

K. West, for respondent. MEMORANDUM FINDINGS OF FACT AND OPINION SWIFT, Judge: In these consolidated cases, respondent determined deficiencies in petitioners’ Federal income taxes and fraud penalties as follows: - 2 - Fraud Penalty Year Deficiency Sec. 6663 1993 $192,142 $144,107 1994 185,261 138,946 1995 123,633 92,725 Unless otherwise indicated, all section references are to the Internal Revenue Code in effect for the years in issue, and all Rule references are to the Tax Court Rules of Pract

Respondent also determined that petitioners are liable for the fraud penalty under section 6663 for each year, but respondent now concedes they are not.

6663 Theron Livingston, Sr. 1989 $3,424 $856 $232 — Theron and Michele Livingston 1990 $24,676 --- — $18,507 After concessions,1 the issues for decision are: (1) Whether Theron Livingston, Sr. (petitioner husband), had $14,690 of unreported income in taxable year 1989 as determined by respondent’s income reconstruction using the net worth meth

1987 $271,885 $48,616 $67,971 -- -- 1989 217,204 42,824 -- -- $162,903 1990 381,883 88,399 -- $75,524 -- Unless otherwise indicated, all section references are to the Internal Revenue Code in effect for the years in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure. After concessions, the issues for dec

from the payment of personal expenses. Held: J-Co. is a sham, and we disregard it for tax purposes. Petitioner’s gross receipts, less allowable business expenses, are includable in his income. Held, further: P is liable for the fraud penalty under sec. 6663, I.R.C. Joseph J. House, pro se. John J. Comeau, for respondent. MEMORANDUM FINDINGS OF FACT AND OPINION LARO, Judge: These cases are before the Court consolidated for purposes of trial, briefing, and opinion. Joseph J. House (petitioner) an

439 (1954); (3) $1,743 in section 6656 penalties for failure to make timely deposits of taxes; and (4) $24,911 in section 6663 fraud penalties.

In those notices, respondent determined the following deficiencies in, and fraud penalties under section 6663 on, their Federal income tax (tax): - 12 - Fraud Penalty Under Taxable Year Ended Deficiency Section 6663 1989 $30,397 $22,798 1990 59,085 44,314 1991 .

vember 19, 1996, respondent determined the following deficiencies, additions to tax, and penalties relating to petitioners' Federal income taxes: - 2 - Additions to Tax1 Penalties1 Year Deficiency Sec. 6653(b) Sec. 6653(b)(1)(A) Sec. 6653(b)(1)(B) Sec. 6663 19873 $9,703 -- $7,278 2 -- 1988 8,833 $6,625 -- -- -- 19893 8,488 -- -- -- $6,366 19903 4,892 -- -- -- 3,669 1 The additions to tax and the penalties apply only to petitioner Edward Drozdowski. 2 Fifty percent of the statutory interest due o

es under section 6673 where the taxpayer advanced frivolous and groundless contentions similar to 1 In the notices of deficiency for each of the years at issue, respondent determined that petitioners were liable for civil fraud penalties pursuant to sec. 6663, or in the alternative, accuracy-related penalties pursuant to sec. 6662. At trial, respondent abandoned the imposition of civil fraud penalties. - 7 - those advanced by petitioners. See Abrams v. Commissioner, supra at 408-413. Although we

In order for that addition to tax to apply, we must consider essentially the same elements that are involved in determining whether a taxpayer is liable for the additions to tax for fraud under section 6663 and its predecessor provision, section 6653(b).

whether a failure to file a return is fraudulent under section 6651(f), we consider the same elements as we did when considering the imposition of the addition to tax for fraud under prior law (former section 6653(b)(1)), and as we do under present section 6663. See H. Rept. 101-247, at 1402- 1403 (1989); Clayton v. Commissioner, 102 T.C. 632, 651-653 (1994). A finding of fraud for any year therefore requires proof that (1) there was an underpayment of tax for that year, and (2) at least some p

ined deficiencies, additions to tax, and penalties with regard to petitioners' 1989, 1990, and 1991 Federal income tax liabilities as follows: - 2 - Accuracy-Related Fraud Addition to Tax Penalty Penalty Year Deficiency Sec. 6651(a)(1) Sec. 6662(a) Sec. 6663 1989 $46,994 $6,689 -- $35,246 1990 32,846 1,494 -- 24,635 1991 34,974 8,834 $6,995 -- Unless otherwise indicated, all section references are to the Internal Revenue Code in effect for the years in issue, and all Rule references are to the T

me tax of petitioner Jerry L. Crabtree: 1Cases involving the following petitioners are con- solidated herewith: Eddie L. Crabtree, docket No. 2918-97; Crabtree Investments, Inc., docket Nos. 3933-97 and 4026- 97. - 2 - Year Deficiency Fraud Penalty Sec. 6663 1992 $97,728 $73,296 1993 49,310 36,983 1994 76,554 57,416 Unless stated otherwise, all section references are to the Internal Revenue Code as in effect during the years in issue. Respondent determined the following deficiencies in and penal

h respondent. When determining whether a failure to file is fraudulent under section 6651(f), we must consider essentially the same elements as are considered in imposing the addition to tax for fraud under former section 6653(b)(1) and the present section 6663. Clayton v. Commissioner, 102 T.C. 632, 653 (1994). When respondent seeks to impose the addition to tax under section 6651(f),4 respondent has the burden of proof. To carry 4 Sec. 6651 provides, in pertinent part, as follows: SEC. 6651. F

ch a penalty has been imposed at a 40 percent rate (i.e., a penalty for gross valuation misstatement under section 6662(b)(3) and (h)). (4) Those with respect to which a penalty has been imposed at a 75 percent rate (i.e., a penalty for fraud under section 6663). [Sec. 1.6664-3(b), Income Tax Regs.] Respondent's computation of the penalty is in accordance with these rules and the implementing examples. Petitioner offers an alternative computation which he claims complies with the statute. In rev

o consideration a tentative net operating loss carryback allowance of $1,214 from 1996); and (4) a penalty due from PCCL in the amount of $140 as provided under section 6662(a). No penalty was due from petitioners or PCCL for fraud as provided under section 6663. Petitioners and PCCL each filed a motion for an award of reasonable litigation and administrative costs. Respondent filed an objection to each motion. Petitioners and PCCL filed a reply to respondent's objections. Each party submitted m

B. Respondent's Determinations Respondent determined a deficiency in income tax for Mr. and Mrs. Lorenz of $31,880 for 1989 and $60,258 for 1990, and determined that they are liable for a fraud penalty of $23,910 for 1989 and $45,194 for 1990 under section 6663. Respondent determined a deficiency in income tax for Comet of $34,710 for 1989 and $64,915 for 1990, and determined that Comet is liable for a fraud penalty of $26,032 for 1989 and $48,686 for 1990 under section 6663. C. The Settlement

d June 29, 1998. W. Waverly Townes, for petitioner. Andrew M. Winkler, for respondent. MEMORANDUM OPINION GERBER, Judge: Respondent determined deficiencies in petitioner's Federal income tax and penalties for fraud as follows: - 2 - Year Deficiency Sec. 6663 1990 $11,998 $8,999 1991 11,803 8,852 1992 11,225 8,419 1993 15,769 11,827 The deficiency in income tax and penalty for 1993 have been reduced to $15,453 and $11,590, respectively, to reflect respondent's concession that the unreported incom

o consideration a tentative net operating loss carryback allowance of $1,214 from 1996); and (4) a penalty due from PCCL in the amount of $140 as provided under section 6662(a). No penalty was due from petitioners or PCCL for fraud as provided under section 6663. Petitioners and PCCL each filed a motion for an award of reasonable litigation and administrative costs. Respondent filed an objection to each motion. Petitioners and PCCL filed a reply to respondent's objections. Each party submitted m

the amount allowed by respondent for the years in issue; (c) petitioner is liable for additions to tax for fraud under section 6653(b)(1)(A) and (B) for 1987 and under section 6653(b) for 1988; (d) petitioner is liable for penalties for fraud under section 6663 for 1989 and 1990; and (e) petitioner is liable for additions to tax for substantially understating income tax under section 6661 for 1987 and 1988.

6663 1991 $80,822.57 -- $60,616.92 $64.36 -- 1992 76,176.58 $7,617.66 -- -- $57,132.43 1993 53,683.19 13,420.80 -- -- 40,262.39 - 2 - All section references are to the Internal Revenue Code in effect for the years in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure. Background On October 21, 1996, petitioner

. Respondent's Determinations Respondent determined a deficiency in income tax for Mr. and Mrs. Lorenz of $31,880 for 1989 and $60,258 for 1990, and determined that they are liable for a fraud penalty of $23,910 • for 1989 and $45,194 for 1990 under section 6663. Respondent determined a deficiency in income tax for Comet of $34,710 for 1989 and $64,915 for 1990, and determined that Comet is liable for a fraud penalty of $26,032 for 1989 and $48,686 for 1990 under section 6663. C. The Settlement

6663 1988 $9,090 $6,818 $2,273 1989 20,791 $15,593 1990 31,436 23,577 Petitioners Anthony and Gloria Donnora, hereinafter sometimes referred to as Anthony and Gloria, respectively, invoked this Court's jurisdiction by filing a timely petition from the notice of deficiency, disputing the entire amounts of the deficiencies and additions to tax.

sider whether petitioner's failure to file was fraudulent within the meaning of section 6651(f). In determining whether a taxpayer's failure to file is fraudulent, we consider the same elements that are considered in imposing the fraud penalty under section 6663. Clayton v. Commissioner, 102 T.C. 632, 653 (1994). Fraud is an intentional wrongdoing designed to evade tax known or believed to be owing. Edelson v. Commissioner, 829 F.2d 828, 833 (9th Cir. 1987), affg. T.C. Memo. 1986-223; Bradford v

ces are to the Internal Revenue Code in effect for the years in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure, unless otherwise (continued...) - 2 - Addition to Tax Fraud Penalty Year Deficiency Sec. 6651(a)(1) Sec. 6663 1990 $66,299 $3,315 $49,724 1991 52,593 - 0 - 39,445 Respondent also determined as an alternative to fraud that the underpayments for 1990 and 1991 are subject to accuracy-related penalties under section 6662(b)(1) and (2). Respondent has co

ich a penalty has been imposed at a 40 percent rate (i.e., a penalty for gross valuation misstatement under section 6662(b)(3) and (h)). (4) Those with respect to which a penalty has been imposed at a 76 percent rate (i.e., a penalty for fraud under section 6663). [Sec. 1.6664 — 3(b), Income Tax Regs.] Respondent’s computation of the penalty is in accordance with these rules and the implementing examples. Petitioner offers an alternative computation which he claims complies with the statute. In

Fraud Penalty Respondent determined that petitioner fraudulently omitted income in the amount of $127,889 from its 1990 return and determined that petitioner is liable for a civil fraud penalty under section 6663 in the amount of $32,726.25.

6663 1988 $ 22,393 $16,795 $5,598 --- 1989 112,205 --- --- $84,154 In the alternative to the fraud addition to tax and penalty, respondent determined a negligence addition to tax for 1988 and an accuracy-related penalty under section 6662(a) for 1989. By amendment to answer, respondent sought revised deficiencies in income tax, additions to ta

amount of $87,516, plus interest as provided by law.1 Respondent determined, and petitioners concede, for the purposes of this proceeding, that Mr. Fisher's unpaid 1991 and 1992 deficiencies and additions to tax are: Addition to Tax Year Deficiency Sec. 6663 1991 $52,165 $40,865 1992 30,771 23,078 The issue for decision is whether petitioners are liable as the transferees of assets of Mr. Fisher under section 6901,2 and, if so, the amount of such liability. FINDINGS OF FACT Some of the facts hav

or respondent. MEMORANDUM FINDINGS OF FACT AND OPINION COLVIN, Judge: Respondent determined deficiencies in petitioners' Federal income tax and additions to tax and penalties as follows: Additions to tax and penalties Year Deficiency Sec. 6653(b)(1) Sec. 6663 1988 $15,843 $11,882 1989 29,538 $22,154 1990 41,403 31,052 - 2 - Respondent also determined that if petitioner was not liable for fraud, he was liable for additions to tax and penalties for negligence under section 6653(a)(1) for 1988, pen

6663 1989 $29,659 $6,589 $268 $21,240 Respondent determined that all but $1,339 of the deficiency was attributable to fraud. Respondent also determined that petitioner was liable for a penalty for negligence under section 6662 for this $1,339 part of the deficiency. On February 27, 1995, respondent filed an answer to petitioner's amended petit

6663 1988 $16,590 $11,387 --- 1989 37,184 --- $26,523 - 2 - Unless otherwise indicated, all section references are to the Internal Revenue Code in effect for the years in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure. After concessions, the issues for decision are: (1) Whether petitioner had unreported in

Fraud The addition to tax for fraud under section 6653(b), and its successor penalty under section 6663, are civil sanctions -26- intended to safeguard the revenue and to reimburse the Government for the heavy expense of investigation and for the loss resulting from a taxpayer's fraud.

Respondent determined that the underpayment of tax was due to fraud under the statute applicable for each taxable year: - 21 - section 6653(b)(1) for 19874 and 1988, and section 6663 for 1989 and 1990.

6663 1988 $48,308 $36,104 $12,035 -- 1989 58,190 -- -- $43,643 Petitioner filed her petition on March 3, 1994. In it, she stated that she would be released from prison in January 1995. She asked that we delay proceedings until after she was released from prison. She filed an amended petition on May 23, 1994. On July 15, 1994, respondent filed

by respondent's motions. A brief review of the provisions of former section 6621(c), as well as the case law developed by this Court 8We observe that the accuracy-related penalty imposed by current sec. 6662 and the fraud penalty imposed by current sec. 6663 are both penalties and not additions to tax. - 18 - in regard to our jurisdiction thereover, will be helpful before we discuss this matter further. Former section 6621(c), originally codified as section 6621(d) and applicable with respect t

gnize that they are the owners of the association. - 23 - Intent, and Purpose in Federal Income Taxation”, 34 U. Chi. Law Rev. 485, 544 (1967); cf. Recklitis v. Commissioner, 91 T.C. 874, 910 (1988) (the objective “badges” or indicia of fraud under sec. 6663); sec. 1.183-2(b), Income Tax Regs. (enumerating the objective factors taken into account evidencing a profit motive). The proper tax characterization cannot turn on the separate intentions of multiple participants in an organization, since

ure to file a return provided by section 6651(f) for 1989.8 In deciding whether a failure to file is fraudulent, we consider the same elements as are considered in imposing the addition to tax for fraud provided by former section 6653(b) and present section 6663. Clayton v. Commissioner, 102 T.C. at 653. Accordingly, we have consolidated our discussion of respondent’s fraud determinations. 8 Sec. 6664(b) provides that, for tax returns the due date for which (determined without regard to extensio

ions to tax are disputed. When determining whether a failure to file is fraudulent under section 6651(f), we must consider the same elements as are considered in imposing the addition to tax for fraud under former section 6653(b)(1) and the present section 6663. Clayton v. Commissioner, 102 T.C. 632, 653 (1994). But respondent has yet to file an Answer in this case and make affirmative allegations in support of her determination as to the addition to tax for fraudulent failure to file, and petit

eferences, or similar outline, analysis, or descriptive matter relating to the contents of this title be given any legal effect. * * * We observe that the accuracy-related penalty imposed by current sec. 6662 and the fraud penalty imposed by current sec. 6663 are both penalties and not additions to tax. Sec. 6621(d) was added to the Internal Revenue Code by the Deficit Reduction Act of 1984, Pub. L. 98-369, sec. 144(a), 98 Stat. 494, 682. Sec. 6621(d) was redesignated sec. 6621(c) by the Tax Ref