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(2) by substituting “75 percent for
“25 percent”.
Respondent has the burden of proving fraud. See sec. 7454(a).
In considering the additions to tax or penalties for fraud, we
consider the same elements under former section 6653(b)(1) and
under section 6651(f). See Clayton v. Commissioner, 102 T.C.
632, 653 (1994).
Respondent has proven unreported income from petitioner’s
business and has allowed deductions that respondent could
identify. Petitioner has failed to present any evidence of
additional deductions that would offset his income. See United
States v. Shavin, 320 F.2d 308, 310-311 (7th Cir. 1963); Elwert
v. United States, 231 F.2d 928, 933-936 (9th Cir. 1956);
Greenwood v. Commissioner, T.C. Memo. 1990-362.
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). Fraud may be proved by
circumstantial evidence because direct proof of the taxpayer’s
intent is rarely available. The taxpayer’s entire course of
conduct may establish the requisite fraudulent intent. See Stone
v. Commissioner, 56 T.C. 213, 223-224 (1971); Otsuki v.
Commissioner, 53 T.C. 96, 105-106 (1969).
Over the years, courts have developed various factors,
referred to as badges of fraud, that tend to establish fraud.
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