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(2) Determination of portion attributable to
fraud.--If the Secretary establishes that any
portion of an underpayment is attributable to
fraud, the entire underpayment shall be treated as
attributable to fraud, except with respect to any
portion of the underpayment which the taxpayer
established is not attributable to fraud.
In regard to proving an underpayment due to fraud, respondent
cannot rely on petitioner's failure to satisfy his burden of
proof as to the deficiency. See DiLeo v. Commissioner, 96 T.C.
858, 873 (1991), affd. 959 F.2d 16 (2d Cir. 1992).
Respondent's burden with respect to fraudulent intent is met
if it is shown that the taxpayer intended to conceal, mislead, or
otherwise prevent the collection of taxes known to be owing.
Stoltzfus v. United States, 398 F.2d 1002, 1004 (3d Cir. 1968);
Webb v. Commissioner, 394 F.2d 366, 377 (5th Cir. 1968), affg.
T.C. Memo. 1966-81. The existence of fraud is a question of fact
to be resolved upon consideration of the entire record. Gajewski
v. Commissioner, 67 T.C. 181, 199 (1976), affd. without published
opinion 578 F.2d 1383 (8th Cir. 1978). Fraud will never be
presumed. Beaver v. Commissioner, 55 T.C. 85, 92 (1970). Fraud
may, however, 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, 56 T.C. 213, 223-224
(1971); Otsuki v. Commissioner, 53 T.C. 96, 105-106 (1969).
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