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to sustain a dividend. Therefore, the constructive distributions
from AJF to Ferrentino must be included in Ferrentino's income as
a dividend.
Accordingly, we hold that respondent has shown by clear and
convincing evidence that Ferrentino had underpayments in tax for
the years in issue due to unreported dividend income in the
amounts he diverted from AJF by cashing the Custom Decorating and
fuel reimbursement checks.
B. Underpayments Due to Fraud
Since we have found that respondent has shown by clear and
convincing evidence that petitioners had underpayments of tax for
the years in issue, the next issue is whether some part of
petitioners' underpayment each year was due to fraud with the
intent to evade tax. Fraud is established by showing that the
taxpayer intended "to evade tax believed to be owing by conduct
intended to conceal, mislead, or otherwise prevent the collection
of such tax." Recklitis v. Commissioner, 91 T.C. at 909. Tax
evasion need not be a primary motive, but the respondent may
satisfy his burden by showing that a "'tax-evasion motive
[played] any part' in petitioner's conduct". Id. Respondent
must establish fraud on the part of each petitioner for each
taxable year involved by clear and convincing evidence. Otsuki
v. Commissioner, 53 T.C. 96, 105 (1969).
The fraud of a sole or dominant shareholder can be
attributed to the corporation. Benes v. Commissioner, 42 T.C.
358, 383 (1964), affd. 355 F.2d 929 (6th Cir. 1966); see also
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