Jerry L. Crabtree - Page 32




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             of the evidence that it is not attributable to fraud.  See               
             sec. 6663(b).                                                            
                  In a case like the present cases in which allegations               
             of fraud are intertwined with unreported and indirectly                  
             reconstructed income, the Commissioner may prove the first               
             prong of the fraud test, that an underpayment exists, in                 
             one of two ways:  (1) By proving a likely source of the                  
             unreported income; or (2) where the taxpayer alleges a                   
             nontaxable source, by disproving the nontaxable source so                
             alleged.  See Parks v. Commissioner, 94 T.C. 654, 661                    
             (1990).                                                                  
                  To prove the second prong of the fraud test,                        
             fraudulent intent, the Commissioner must show 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.  See Recklitis v. Commissioner,              
             91 T.C. 874, 909 (1988); Rowlee v. Commissioner, 80 T.C.                 
             1111, 1123 (1983).  The existence of fraud is a question                 
             of fact to be resolved upon consideration of the entire                  
             record.  See DiLeo v. Commissioner, supra at 874; Gajewski               
             v. Commissioner, 67 T.C. 181, 199 (1976), affd. without                  
             published opinion 578 F.2d 1383 (8th Cir. 1978).  Fraud                  
             will never be imputed or presumed but must be affirmatively              







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