Robert P. Lord, Appellee-Cross-Appellant v. Commissioner of Internal Revenue, Appellant-Cross-Appellee

The Commissioner and the taxpayer appeal from a decision of the United States Tax Court (Lord v. Commissioner, 60 T.C. 199 (1973)). The Commissioner’s appeal is from the Tax Court’s refusal to uphold the 50% fraud penalty on a $63,-366.82 deficiency in the taxpayer’s income tax' liability for the years 1961 through 1966. The taxpayer appeals from so much of the Tax Court’s decision holding that taxpayer’s income during five of those years was his separate property and not community property. On the Commissioner’s appeal, we reverse. We affirm on the taxpayer’s appeal, adopting the Tax Court’s opinion on the community property issue.

Our jurisdiction is derived from 26 U.S.C. § 7482 (a), which provides:

Accordingly, “[fjindings of fact shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge of the credibility of the witnesses.” (Fed. R.Civ.P. 52(a)). See Commissioner v. Duberstein, 363 U.S. 278, 291 , 80 S.Ct. 1190 , 4 L.Ed.2d 1218 (1960).

After a thorough review of the entire record, we are satisfied that the Tax Court’s finding that the Commissioner had failed to sustain his burden of proving fraud…