- 24 -
concluded that petitioner underpaid his taxes in the 1988, 1989,
and 1991 tax years due in part to unreported income from deposits
into the Mitsui account and unsubstantiated wage deductions for
amounts paid to Mr. Yoon.6 We must now determine whether
petitioner had the requisite fraudulent intent with regard to
these underpayments in 1989 and 1991.
B. Fraudulent Intent
Next, respondent must prove that a portion of each
underpayment for 1989 and 1991 was due to fraud. Professional
Servs. v. Commissioner, 79 T.C. 888, 930 (1982). The existence
of fraud is a question of fact to be resolved upon consideration
of the entire record. DiLeo v. Commissioner, 96 T.C. 858, 874
(1991), affd. 959 F.2d 16 (2d Cir. 1992). Fraud is never
presumed but, rather, must be established by affirmative
evidence. Edelson v. Commissioner, 829 F.2d 828 (9th Cir. 1987),
affg. T.C. Memo. 1986-223. Fraud may be proved by circumstantial
evidence because direct proof of the taxpayer's intent is rarely
available. The taxpayer's entire course of conduct may establish
the requisite fraudulent intent. Stone v. Commissioner, supra at
223-224.
6 Respondent does not assert fraud with respect to the
yearend ledger adjustment. Thus, the only remaining
underpayments as to which respondent is asserting fraud are the
$3,000 cash deposit into the Mitsui account in 1989, the checks
deposited in 1991 into the same account, and the amounts from the
cashed checks that petitioner claims went to Mr. Yoon as
compensation.
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