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portion of the underpayment is not due to fraud. Respondent
concedes that Myrsini Stotis is not liable for the penalty for
fraud.
The Commissioner has the burden of proving fraud by clear
and convincing evidence. Sec. 7454(a); Rule 142(b). First, the
Commissioner must prove the existence of an underpayment. Parks
v. Commissioner, 94 T.C. 654, 660 (1990). The Commissioner may
not rely upon the taxpayer's failure to carry the burden of proof
as to the underlying deficiency. Id. at 660-661; Petzoldt v.
Commissioner, 92 T.C. 661, 700 (1989); Estate of Beck v.
Commissioner, 56 T.C. 297, 363 (1971). Second, the Commissioner
must show that the taxpayer intended to evade taxes by conduct
intended to conceal, mislead, or otherwise prevent tax
collection. Stoltzfus v. United States, 398 F.2d 1002, 1004 (3d
Cir. 1968); Parks v. Commissioner, supra at 661; Rowlee v.
Commissioner, 80 T.C. 1111, 1123 (1983).
For the reasons discussed above, we find that respondent has
established substantial amounts of unreported income and
consequent underpayment of tax for 1989.
Respondent must prove by clear and convincing evidence that
petitioner had fraudulent intent. Parks v. Commissioner, supra
at 664. Fraud may be proven by circumstantial evidence.
Stephenson v. Commissioner, 79 T.C. 995, 1005-1006 (1982), affd.
748 F.2d 331 (6th Cir. 1984). A taxpayer's entire course of
conduct may establish the requisite fraudulent intent. Stone v.
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