Stanley P. Zurn - Page 41

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          issue and that some portion of the underpayment is due to fraud.            
          Sec. 7454(a); Rule 142(b).  To meet this burden, respondent must            
          show that petitioner intended to evade taxes known to be owing by           
          conduct intended to conceal, mislead, or otherwise prevent the              
          collection of taxes.  Stoltzfus v. United States, 398 F.2d 1002             
          (3d Cir. 1968); Webb v. Commissioner, 394 F.2d 366 (5th Cir.                
          1968), affg. T.C. Memo. 1966-81; 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.  Estate of Pittard v.              
          Commissioner, 69 T.C. 391 (1977); Gajewski v. Commissioner, 67              
          T.C. 181, 199 (1976), affd. without published opinion 578 F.2d              
          1383 (8th Cir. 1978).  Fraud is not to be imputed or presumed,              
          but it must be established by some independent evidence of                  
          fraudulent intent.  Beaver v. Commissioner, 55 T.C. 85, 92                  
          (1970); Otsuki v. Commissioner, 53 T.C. 96 (1969).  Fraud may not           
          be found under "circumstances which at the most create only                 
          suspicion."  Davis v. Commissioner, 184 F.2d 86, 87 (10th Cir.              
          1950); Petzoldt v. Commissioner, 92 T.C. 661, 700 (1989).                   
          However, fraud may be proved by circumstantial evidence and                 
          reasonable inferences drawn from the facts because direct proof             
          of the taxpayer's intent is rarely available.  Spies v. United              
          States, 317 U.S. 492 (1943); Rowlee v. Commissioner, supra;                 
          Stephenson v. Commissioner, 79 T.C. 995 (1982), affd. per curiam            






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