- 20 -
to explore the implications of Richardson v. Commissioner, supra
and Perez v. Commissioner, supra. Consequently, we conclude,
that respondent has shown by clear and convincing evidence that
petitioner had unreported gross receipts, net of expenses, which
result in an underpayment of tax for each year in issue.
B. Proof That the Underpayment Was Due to Fraud
Fraud is defined as an intentional wrongdoing designed to
evade tax believed to be owing. Powell v. Granquist, 252 F.2d 56
(9th Cir. 1958); DiLeo v. Commissioner, 96 T.C. at 874; Miller v.
Commissioner, 94 T.C. 316, 332 (1990). The Commissioner's burden
of proving fraud is met if it is shown that the taxpayer intended
to evade taxes known to be owing by conduct intended to conceal,
mislead or otherwise prevent the collection of taxes. Stoltzfus
v. United States, 398 F.2d 1002, 1004 (3d Cir. 1968); DiLeo v.
Commissioner, supra at 874; Rowlee v. Commissioner, 80 T.C. 1111,
1123 (1983).
The existence of fraud is a question of fact and is to be
19(...continued)
1These figures (rounded to the nearest dollar) represent petitioner's
unreported gross receipts as recalculated in accordance with this opinion.
See the discussion concerning gross receipts in part II of this opinion,
infra.
2These figures represent the amount of band expenses claimed by
petitioner in the stipulated computations. As discussed infra, we conclude
that petitioner is entitled to deduct band expenses in the amount of $18,150
for 1987, $19,800 for 1988, $16,088 for 1989, and $13,200 for 1990.
3Respondent concedes that petitioner may deduct the 7-percent New York
State sales tax associated with any additional gross receipts received by
petitioner from the sale of beer, wine, or liquor. We computed the sales tax
shown above on the basis of the amount of petitioner's unreported gross
receipts as recalculated in accordance with this opinion.
4These figures represent the additional purchases allowed by respondent
in the deficiency notice and in the stipulation of facts.
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