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b. Fraudulent Intent
For Hamalee's 1985 and 1986 taxable years, and the Lees'
1987 and 1988 taxable years, we turn to the second prong of the
two-prong test. The existence of fraud is a question of fact.
Gajewski v. Commissioner, 67 T.C. 181, 199 (1976), affd. without
published opinion 578 F.2d 1383 (8th Cir. 1978). Fraud is never
presumed or imputed; it must be established by independent
evidence that establishes a fraudulent intent on the taxpayer's
part. Otsuki v. Commissioner, 53 T.C. 96, 106 (1969). Because
direct proof of a taxpayer's intent is rarely available, fraud
may be proven by circumstantial evidence and reasonable
inferences may be drawn from the relevant facts. Spies v. United
States, 317 U.S. 492, 499 (1943); Stephenson v. Commissioner,
79 T.C. 995, 1006 (1982), affd. 748 F.2d 331 (6th Cir. 1984).
An intent to conceal or mislead may be inferred from a pattern of
conduct, Spies v. United States, supra at 499, or from a
taxpayer's entire course of conduct, Stone v. Commissioner,
56 T.C. 213, 223-224 (1971). A pattern showing a consistent
underreporting of income, when accompanied by other facts
evidencing an intent to conceal, also justifies an inference of
fraud. Holland v. United States, 348 U.S. 121, 137 (1954);
Parks v. Commissioner, supra; Otsuki v. Commissioner, supra at
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