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Respondent must also show that petitioner intended to evade
taxes known to be owing by conduct designed to conceal, mislead,
or otherwise prevent the collection of taxes. Stoltzfus v.
United States, 398 F.2d 1002, 1004 (3d Cir. 1968); Rowlee v.
Commissioner, 80 T.C. 1111, 1123 (1983). 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 is never imputed or presumed. Instead, it must be
affirmatively established by the Commissioner with clear and
convincing evidence. Beaver v. Commissioner, 55 T.C. 85, 92
(1970). Since direct proof of a taxpayer's intent is rarely
available, fraud may be proven with circumstantial evidence and
reasonable inferences drawn from established facts. Spies v.
United States, 317 U.S. 492, 500 (1943); Rowlee v. Commissioner,
supra at 1123.
Petitioner understated his taxable income for 1983 through
1985 and failed to file a return altogether for taxable year
1986. Such conduct constitutes strong evidence of fraud. Otsuki
v. Commissioner, 53 T.C. 96, 107-108 (1969); Adams v.
Commissioner, T.C. Memo. 1990-38. On the tax returns that he did
file, petitioner falsely stated that his income was excludable
because he resided outside the United States. When interviewed
by IRS special agents concerning his Federal income tax
liabilities for the years in issue, petitioner stated that he was
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