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convincing evidence. Sec. 7454(a); Rule 142(b).3 To satisfy
this burden, respondent must prove that petitioners intended to
evade taxes known to be owing by conduct intended to conceal,
mislead, or otherwise prevent the collection of taxes. 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. DiLeo v. Commissioner,
96 T.C. 858, 874 (1991), affd. 959 F.2d 16 (2d Cir. 1992); Estate
of Pittard v. Commissioner, 69 T.C. 391 (1977). Fraud is never
presumed and must be established by independent evidence that
establishes fraudulent intent. Edelson v. Commissioner, supra;
Beaver v. Commissioner, 55 T.C. 85, 92 (1970). Fraud may be
proven by circumstantial evidence because direct evidence of the
taxpayer's fraudulent intent is seldom available. Spies v.
United States, 317 U.S. 492 (1943); Rowlee v. Commissioner,
supra; Gajewski v. Commissioner, 67 T.C. 181, 199 (1976), affd.
without published opinion 578 F.2d 1383 (8th Cir. 1978). The
3 Petitioners had raised the defense that the period for
assessment had expired when respondent issued the notice of
deficiency for the 1990 year. The 1990 year comes into play in
the context of this case if petitioners are entitled to
installment sale treatment. In that event respondent would also
have the burden of proving that an exception to the general
period of limitations applies. Stratton v. Commissioner, 54 T.C.
255, 289 (1970). That question is mooted by our holding that
petitioners are not entitled to installment reporting. Even if
petitioners had been successful on the installment reporting
issue, respondent has carried the burden of showing a fraudulent
return, and, therefore, the period for assessment would not have
expired prior to issuance of the deficiency notice. Sec.
6501(c)(1).
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