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admissions, it follows that respondent is entitled to judgment on
the pleadings that petitioners are liable for the deficiency in
tax for 1991 as set forth in the notice of deficiency.
Respondent also determined that petitioners are liable for
the penalty for fraud under section 6663(a) for 1991. Section
6663(a) provides that if any part of the underpayment of tax
required to be shown on the return is due to fraud, there shall
be added to the tax an amount equal to 75 percent of the portion
of the underpayment that is attributable to fraud.
Fraud is defined as an intentional wrongdoing designed to
evade tax believed to be owing. Zell v. Commissioner, 763 F.2d
1139, 1142-1143 (10th Cir. 1985), affg. T.C. Memo. 1984-152; Webb
v. Commissioner, 394 F.2d 366, 377 (5th Cir. 1968), affg. T.C.
Memo. 1966-81, and cases cited therein. Respondent has the
burden to prove fraud by clear and convincing evidence. Sec.
7454(a); Rule 142(b). Fraud is a question of fact to be resolved
upon consideration of the entire record and is never presumed.
Estate of Pittard v. Commissioner, 69 T.C. 391, 400 (1977).
Respondent's burden of proving fraud can be met by facts deemed
admitted pursuant to Rule 37(c). Doncaster v. Commissioner, 77
T.C. 334, 337 (1981); see Marshall v. Commissioner, 85 T.C. 267,
272-273 (1985).
In the instant case, petitioners are deemed to have
admitted, pursuant to Rule 37(c), that they attempted to conceal
from respondent the source and amount of the income that
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