-26-
intended to safeguard the revenue and to reimburse the Government
for the heavy expense of investigation and for the loss resulting
from a taxpayer's fraud. Helvering v. Mitchell, 303 U.S. 391,
401 (1938); Ianniello v. Commissioner, 98 T.C. 165, 183-185
(1992). Respondent has the burden of proving, by clear and
convincing evidence, an underpayment for each year and that some
part of the underpayment was due to fraud. If respondent
establishes that any portion of the underpayment is attributable
to fraud, the entire underpayment is treated as attributable to
fraud and subjected to a 75-percent addition to tax or penalty,
unless the taxpayer establishes that some part of the
underpayment is not attributable to fraud. See section
6653(b)(2) for 1988 and section 6663(b) for 1990 and 1991.
Respondent's burden with respect to fraudulent intent is met
if it is shown that the taxpayer intended to conceal, mislead, or
otherwise prevent the collection of taxes known to be owing.
See, e.g., Webb v. Commissioner, 394 F.2d 366, 377 (5th Cir.
1968), affg. T.C. Memo. 1966-81. Fraud may be proved by
circumstantial evidence because direct proof of the taxpayer's
intent is rarely available. The taxpayer's entire course of
conduct may establish the requisite fraudulent intent. Stone v.
Commissioner, 56 T.C. 213, 223-224 (1971); Otsuki v.
Commissioner, supra at 105-106. Fraudulent intent may be
inferred from various "badges of fraud". Bradford v.
Page: Previous 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 NextLast modified: May 25, 2011