Patricia G. McCulley - Page 7

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               Under section 6653(b) respondent has the burden of proving             
          by clear and convincing evidence that there is an underpayment of           
          tax and that some part of the underpayment was due to fraud.  See           
          sec. 7454(a); Rule 142(b).  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 such               
          taxes.  Rowlee v. Commissioner, 80 T.C. 1111, 1123 (1983).  Where           
          a taxpayer claims ignorance of the law or a good-faith belief               
          that he was not violating any of the provisions of the tax laws,            
          the Commissioner must negate that claim by clear and convincing             
          evidence.  Cheek v. United States, 498 U.S. 192, 202 (1991); see            
          also Niedringhaus v. Commissioner, 99 T. C. 202, 217 (1992).  For           
          purposes of the section 6653(b)(2) interest computation,                    
          respondent must also prove the portion of the underpayment                  
          attributable to fraud.  Sec. 6653(b)(2); DiLeo v. Commissioner,             
          96 T.C. 858, 873 (1991), affd. 959 F.2d 16 (2d Cir. 1992).                  
               The existence of fraud is a question of fact to be resolved            
          upon consideration of the entire record.  Gajewski v.                       
          Commissioner, 67 T.C. 181, 199 (1976), affd. without published              
          opinion 578 F.2d 1383 (8th Cir. 1978).  Fraud will never be                 
          presumed.  Beaver v. Commissioner, 55 T.C. 85, 92 (1970).  Fraud            
          may, however, be proved by circumstantial evidence, because                 
          direct proof of the taxpayer's intent is rarely available.                  
          Rowlee v. Commissioner, supra.  The taxpayer's entire course of             
          conduct may establish the requisite fraudulent intent.  Stone v.            

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