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1988, respondent need only prove that some part of each year's
underpayment was due to fraud. Sec. 6653(b)(1). The burden then
shifts to the taxpayer to establish that a portion of the
underpayment is not attributable to fraud. Sec. 6653(b)(2).
Respondent must prove fraud with affirmative evidence for
each year; fraud is never imputed or presumed. Beaver v.
Commissioner, 55 T.C. 85, 92 (1970). In this respect,
petitioner's failure to satisfy her burden of proving error does
not satisfy respondent's burden of proving fraud. Petzoldt v.
Commissioner, 92 T.C. 661, 700 (1989); Habersham-Bey v.
Commissioner, 78 T.C. 304, 312 (1982). Nevertheless, when direct
evidence is not available, fraud may be established by
circumstantial evidence. Kotmair v. Commissioner, 86 T.C. 1253,
1260 (1986). It is well settled that fraud may be established
through facts deemed admitted under Rule 90. Marshall v.
Commissioner, 85 T.C. 267, 272 (1985); Doncaster v. Commissioner,
77 T.C. 334, 338 (1981).
Courts have developed a nonexclusive list of factors
demonstrating fraudulent intent. These "badges of fraud"
4(...continued)
31, 1988. Sec. 6653(b)(2) remained the same as under the Tax
Reform Act of 1986. Following its amendment, sec. 6653(b)(1)
provides in pertinent part:
(1) In general.--If any part of any underpayment
* * * of tax required to be shown on a return is due
to fraud, there shall be added to the tax an amount
equal to 75 percent of the portion of the underpayment
which is attributable to fraud.
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