- 34 -
T.C. 940, 959-963 (1956), affd. sub nom. Levine v. Commissioner,
250 F.2d 798 (2d Cir. 1958). A mere understatement of income
does not establish fraud. However, a pattern of consistent
under-reporting of income for a number of years is strong
evidence of fraud. Estate of Mazzoni v. Commissioner, 451 F.2d
197, 202 (3d Cir. 1971), affg. T.C. Memos. 1970-144 and 1970-37;
Adler v. Commissioner, 422 F.2d 63, 66 (6th Cir. 1970), affg.
T.C. Memo. 1968-100; Otsuki v. Commissioner, 53 T.C. at 108.
The issue of fraud poses a factual question that is to be
decided on an examination of all the evidence in the record.
Plunkett v. Commissioner, 465 F.2d at 303; Mensik v.
Commissioner, 328 F.2d 147, 150 (7th Cir. 1964), affg. 37 T.C.
703 (1962); Stone v. Commissioner, 56 T.C. at 224.
In order to establish fraud as to a petitioner, respondent
must show that petitioner intended to evade taxes, which he or it
knew or believed were owed, by conduct intended to conceal,
mislead, or otherwise prevent the collection of taxes. E.g., Webb
v. Commissioner, 394 F.2d 366, 377 (5th Cir. 1968), affg. T.C.
Memo. 1966-81; Powell v. Granquist, 252 F.2d 56, 60 (9th Cir.
1958); Danenberg v. Commissioner, 73 T.C. 370, 393 (1979); McGee
v. Commissioner, 61 T.C. 249, 256-257 (1973), affd. 519 F.2d 1121
(5th Cir. 1975). This intent may be inferred from circumstantial
evidence, Powell v. Granquist, 252 F.2d at 61; Gajewski v.
Commissioner, 67 T.C. 181, 200 (1976), affd. without published
opinion 578 F.2d 1383 (8th Cir. 1978), including the
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