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The presence of fraud is a question of fact to be resolved
upon consideration of the entire record. See Recklitis v.
Commissioner, supra at 909. Although fraud is never imputed or
presumed, intent to defraud may be proven by circumstantial
evidence. See Clayton v. Commissioner, supra at 647; Recklitis
v. Commissioner, supra at 909-910.
Here, given our conclusion above regarding the existence of
a deficiency, an underpayment of tax has been established. In
addition, through presentation of circumstantial evidence,
respondent has carried the burden of showing that some portion of
this underpayment is due to fraud. Moreover, because petitioner
has failed to offer any evidence that some part of the deficiency
cannot be attributed to fraud, the section 6663 penalty applies
to the entire underpayment.
This case reveals a specific fraudulent intent on the part
of petitioner to evade tax. Petitioner neglected to maintain
adequate records to substantiate more than $25,000 in deductions.
In addition, evidence of intent to defraud is particularly
apparent in the implausibility and inconsistencies surrounding
the two documents allegedly offered to validate these deductions.
Because testimony at trial indicated that neither document was
legitimate, petitioner presented false evidence for purposes of
misleading the tax authorities. Moreover, statements made by
petitioner with regard to these documents reveal inconsistent
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