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deficiency notice, respondent determined that the section 6662(a)
accuracy-related penalty would apply in the event it was decided
that the underpayment was not due to fraud. A prerequisite to
the applicability of sections 6662 and 6663 is that a return of
tax, other than one prepared by respondent pursuant to section
6020(b), is filed. Sec. 6664(b); Clayton v. Commissioner, 102
T.C. 632, 652-653 (1994).
Section 6663(b) provides that if respondent establishes that
any part of any underpayment of tax required to be shown on a
return is due to fraud, the entire underpayment is treated as
attributable to fraud and subjected to a 75-percent penalty
unless the taxpayer establishes that some part of the
underpayment is not attributable to fraud. Respondent bears the
burden to prove by clear and convincing evidence an underpayment
for each year and that some part of the underpayment for each
year was due to fraud. Section 7454(a); Rule 142(b); Clayton v.
Commissioner, supra at 646.
Fraud is established by proving that a taxpayer intended to
evade tax believed to be owing by conduct intended to conceal,
mislead, or otherwise prevent the collection of such tax.
Clayton v. Commissioner, supra at 647. Direct evidence of the
requisite fraudulent intent is seldom available, but fraud may be
proved by examining circumstantial evidence indicative of the
taxpayer's motives. Recklitis v. Commissioner, 91 T.C. 874, 910
(1988). Over the years, courts have developed various factors,
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