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investigation and the loss resulting from a taxpayer's fraud.
Helvering v. Mitchell, 303 U.S. 391, 401 (1938). Respondent has
the burden of proving, by clear and convincing evidence, an
underpayment for each year and that some part of the underpayment
was due to fraud. Sec. 7454(a); Rule 142(b). To satisfy her
burden of proof, respondent must show two things: (1) An
underpayment exists; and (2) the taxpayer intended to evade taxes
known to be owing by conduct intended to conceal, mislead, or
otherwise prevent the collection of taxes. Parks v.
Commissioner, 94 T.C. 654, 660-661 (1990). The mere failure to
report income, however, is not sufficient to establish fraud.
Switzer v. Commissioner, 20 T.C. 759, 765 (1953). If respondent
establishes that any portion of the underpayment is attributable
to fraud, the entire underpayment is treated as attributable to
fraud and subjected to an addition to tax or penalty, except with
respect to any portion of the underpayment that the taxpayer
establishes is not attributable to fraud. Sec. 6653(b)(2) for
1986 through 1988 and sec. 6663(b) for 1989.
Fraud is intentional wrongdoing on the part of the taxpayer
with the specific purpose to evade a tax believed to be owing.
McGee v. Commissioner, 61 T.C. 249, 256 (1973), affd. 519 F.2d
1121 (5th Cir. 1975). The existence of fraud is a question of
fact to be resolved from the entire record. Gajewski v.
Commissioner, 67 T.C. 181, 199 (1976), affd. without published
opinion 578 F.2d 1383 (8th Cir. 1978). Respondent must meet her
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