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Commissioner, 91 T.C. 874, 909 (1988); Stone v. Commissioner, 56
T.C. 213, 220 (1971).
Funds received by a taxpayer through misappropriation or
embezzlement constitute taxable income to the taxpayer. James v.
United States, 366 U.S. 213, 219 (1961).
Funds received as loans, however, are not properly treated
as taxable income. James v. United States, supra at 219. If
there exists between a taxpayer who receives funds and the
provider of funds a good-faith expectation that the funds are to
be repaid and an obligation to do so, the funds in the hands of
the taxpayer will be treated as nontaxable loan proceeds. See
Collins v. Commissioner, 3 F.3d 625, 631 (2d Cir. 1993), affg.
T.C. Memo. 1992-478. Funds received by a taxpayer as an agent or
conduit of a corporation are not treated as taxable income. See
Lashells’ Estate v. Commissioner, 208 F.2d 430, 435 (6th Cir.
1953), affg. in part, revg. in part and remanding a Memorandum
Opinion of this Court; Ishijima v. Commissioner, T.C. Memo. 1994-
353.
With regard to fraudulent intent, respondent must prove that
petitioner intended to evade taxes by conduct intended to
conceal, mislead, or otherwise prevent the collection of taxes.
Clayton v. Commissioner, supra at 647; Parks v. Commissioner, 94
T.C. 654, 661 (1990); Hebrank v. Commissioner, 81 T.C. 640, 642
(1983). Fraud may be proven by circumstantial evidence because
direct evidence of fraud is generally not available. Clayton v.
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