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(1984). Thus, respondent has proven that petitioners underpaid
their Federal income taxes for each of the subject years.
As to the second prong of the test; i.e., the presence of
fraud, the existence of fraud is a question of fact. Gajewski v.
Commissioner, 67 T.C. 181, 199 (1976), affd. 578 F.2d 1383 (8th
Cir. 1978). Fraud is never presumed or imputed; it must be
established by independent evidence that establishes a fraudulent
intent on the taxpayer's part. Otsuki v. Commissioner, 53 T.C.
96 (1969). Because direct proof of a taxpayer's intent is rarely
available, fraud may be proven by circumstantial evidence and
reasonable inferences may be drawn from the relevant facts.
Spies v. United States, 317 U.S. 492 (1943); Stephenson v.
Commissioner, 79 T.C. 995 (1982), affd. 748 F.2d 331 (6th Cir.
1984). Where fraud is determined for multiple years, as is the
case here, respondent must establish the requisite fraudulent
intent for each of those years in order to prevail as to all of
those years. The Court may sustain respondent’s determination of
fraud only as to those years for which the fraudulent intent is
established clearly and convincingly.
We often rely on certain indicia of fraud in deciding the
existence of fraud. The presence of several indicia is
persuasive circumstantial evidence of fraud. Beaver v.
Commissioner, 55 T.C. 85, 93 (1970). The "badges of fraud"
include: (1) Filing of false documents, (2) understatement of
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