5. Lucinda filed her Year 1 return on June 17, Year 2. The IRS has sent Lucinda a

notice of deficiency that includes a fraud penalty, and Lucinda has timely petitioned

the Tax Court.

A. Which party bears the burden of proving fraud on Lucinda's part?

B. Can the IRS assert for the first time in its answer that Lucinda's return was

not timely filed?

i. Assuming that the IRS can raise the late-filing issue in its answer, can the

IRS assert a delinquency penalty in addition to the fraud penalty?

ii. Assuming that the IRS can raise the late-filing issue in its answer, and

that if Lucinda's return is late it will affect the amount of the penalties

that Lucinda may owe, who will bear the burden of proof on this issue?

C. Can a negligence penalty automatically apply in either of the following

circumstances?

i. Lucinda prevails on the issue of fraud.

ii. Lucinda loses on the issue of fraud.

D.If the IRS loses on the fraud issue, does that outcome affect the deadline for

assessing any tax that may be due for Lucinda's Year 1 tax year?