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See Helvering v. Mitchell, 303 U.S. 391, 401 (1938). Fraud is
intentional wrongdoing on the part of the taxpayer with the
specific purpose to evade a tax believed to be owing. See McGee
v. Commissioner, 61 T.C. 249, 256 (1973), affd. 519 F.2d 1121
(5th Cir. 1975).
The Commissioner has the burden of proving fraud by clear
and convincing evidence. See sec. 7454(a); Rule 142(b). To
satisfy the burden of proof, the Commissioner must show: (1) An
underpayment exists; and (2) the taxpayer intended to evade taxes
known to be owing by conduct intended to conceal, mislead, or
otherwise prevent the collection of taxes. See Parks v.
Commissioner, 94 T.C. 654, 660-661 (1990). The Commissioner must
meet this burden through affirmative evidence because fraud is
never imputed or presumed. See Beaver v. Commissioner, 55 T.C.
85, 92 (1970).
A. Fraudulent Intent
The Commissioner must prove that a portion of the
underpayment for each taxable year in issue was due to fraud.
See Professional Servs. v. Commissioner, 79 T.C. 888, 930 (1982).
The existence of fraud is a question of fact to be resolved from
the entire record. See Gajewski v. Commissioner, 67 T.C. 181,
199 (1976), affd. without published opinion 578 F.2d 1383 (8th
Cir. 1978). Because direct proof of a taxpayer's intent is
rarely available, fraud may be proven by circumstantial evidence,
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