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large expenditures during 1987, 1988, 1989, and 1990 that are
inconsistent with the gross income reported by petitioners for
those years. Mr. Katerelos alleges several sources for those
expenditures other than his underreporting of the gross receipts
of NDV. However, we did not find his testimony to be credible,
and we are unwilling to rely on the testimony of Mr. Fisher, a
close personal friend of Mr. Katerelos, who testified on his
behalf about the alleged source of the funds for those expendi-
tures.
Based on our examination of the entire record before us, we
find that respondent has established by clear and convincing
evidence that there was an underpayment of petitioners' income
tax for each of the years 1987 through 1990 as a result of Mr.
Katerelos' underreporting certain gross receipts of NDV for each
of those years.
Fraudulent Intent
To prove that an underpayment is attributable to the fraudu-
lent intent of a taxpayer, respondent must prove that the tax-
payer intended to evade taxes that he or she believed to be owing
by conduct intended to conceal, mislead, or otherwise prevent the
collection of such taxes. Stoltzfus v. United States, 398 F.2d
1002, 1004 (3d Cir. 1968); Parks v. Commissioner, 94 T.C. at 661;
see Laurins v. Commissioner, 889 F.2d 910, 913 (9th Cir. 1989),
affg. Norman v. Commissioner, T.C. Memo. 1987-265. The existence
of fraudulent intent is a question of fact to be resolved upon
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