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Fraud may not be found under "circumstances which at the
most create only suspicion." Davis v. Commissioner, 184 F.2d 86,
87 (10th Cir. 1950); Katz v. Commissioner, 90 T.C. 1130, 1144
(1988). Merely underreporting or failing to report income is
insufficient to establish fraud. Merritt v. Commissioner, 301
F.2d 484, 487 (5th Cir. 1962), affg. T.C. Memo. 1959-172.
However, a pattern of consistent underreporting of income may be
strong evidence of fraud, especially when accompanied by other
circumstances showing intent to conceal. Mazzoni v.
Commissioner, T.C. Memo. 1970-37, affd. 451 F.2d 197, 202 (3d
Cir. 1971); see Holland v. United States, 348 U.S. at 137. Fraud
is an intentional wrongdoing by a taxpayer that is designed to
evade tax believed to be owing. Edelson v. Commissioner, 829
F.2d 828, 833 (9th Cir. 1987), affg. T.C. Memo. 1986-223.
The existence of fraud is a question of fact to be resolved
upon consideration of the entire record, DiLeo v. Commissioner,
96 T.C. at 874; Gajewski v. Commissioner, 67 T.C. 181, 199
(1976), affd. without published opinion 578 F.2d 1383 (8th Cir.
1978), and the taxpayer's entire course or pattern of conduct.
Spies v. United States, 317 U.S. 492, 499 (1943); Stone v.
Commissioner, supra at 224; Otsuki v. Commissioner, supra at 105-
106;. Because direct proof of fraudulent intent is rarely
available, fraud may be shown by circumstantial evidence and
reasonable inferences drawn from the facts. Miller v.
Commissioner, 94 T.C. 316, 333 (1990); Stephenson v.
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