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intended to conceal, mislead, or otherwise prevent the collection
of taxes owed or believed to be owed. See, e.g., Danenberg v.
Commissioner, 73 T.C. 370, 393 (1979). Respondent has the burden
of proving the existence of fraud by clear and convincing
evidence. See sec. 7454(a); Rule 142(b); Grosshandler v.
Commissioner, 75 T.C. 1, 19 (1980). Where fraud is determined
for each of several years, respondent’s burden applies separately
for each of the years. See, e.g., Temple v. Commissioner, T.C.
Memo. 2000-337. The issue of whether fraud exists is factual and
must be determined upon the basis of the entire record. See,
e.g., Recklitis v. Commissioner, 91 T.C. 874, 909 (1988). Fraud
cannot be presumed, nor can a finding of fraud rest on mere
suspicion. See, e.g., id. However, since direct evidence of
fraud generally is not available, we may rely on circumstantial
evidence and draw reasonable inferences from the record as a
whole. See, e.g., id. at 910. We consider first for each year
in issue the question of whether a deficiency exists.
a. Existence of an Underpayment
The first element in establishing fraud is determining
whether any underpayment of tax exists. For 1983 through 1988,
section 6653(c)(1) defines an “underpayment” for purposes of
section 6653 as a “deficiency” defined by section 6211. Section
6211 generally defines a deficiency as the excess of the correct
amount of tax over the amount shown on the return. For 1989 and
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