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account for the unreported income. Mr. Bacon originally claimed
to have had $650,000 in nontaxable cash gifts on hand at the
beginning of 1988, which would have been a potential nontaxable
source. However, at trial petitioners stipulated that they only
had $35,000 cash on hand at the beginning of 1988. Petitioners
stipulated that they did not receive any gifts, inheritances,
legacies, or devises.
Respondent’s final bank deposit analysis is based primarily
on stipulated facts. The record contains clear and convincing
affirmative evidence that petitioners underpaid their 1988, 1989,
1990, and 1991 Federal income taxes.
B. Fraudulent Intent
Respondent must prove that a portion of the underpayment is
attributable to the fraudulent intent of petitioners. Fraud is
the intentional wrongdoing motivated by a specific purpose to
evade a tax known or believed to be owing. See Stoltzfus v.
United States, 398 F.2d 1002, 1004 (3d Cir. 1968). The existence
of fraud is a question of fact to be resolved upon consideration
of the entire record. See Gajewski v. Commissioner, 67 T.C. 181,
199 (1976), affd. without published opinion 578 F.2d 1383 (8th
Cir. 1978).
Fraudulent intent can seldom be established by a single act
or by direct proof of the taxpayer’s intention. It is usually
found by surveying the taxpayer’s whole course of conduct and is
to be proven as any other fact from all the evidence of record
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