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evidence. Accordingly, we hold that petitioner is not entitled
to Schedule C business deductions in excess of $127,879 and
$157,207 for the taxable years 1990 and 1991, respectively.
II. Is Petitioner Liable for the Fraud Penalty for 1990?
Section 6663(a) provides for a 75-percent penalty on any
part of an underpayment that is due to fraud. Respondent bears
the burden of showing by clear and convincing evidence that an
underpayment exists for the year in issue and that it is due to
fraud. Sec. 7454(a); Rule 142 (b). Fraud has been defined as an
intentional wrongdoing designed to evade tax believed to be
owing. Bradford v. Commissioner, 796 F.2d 303, 307 (9th Cir.
1986), affg. T.C. Memo. 1984-601. The existence of fraud is a
question of fact to be resolved upon consideration of the entire
record. Estate of Pittard v. Commissioner, 69 T.C. 391, 400
(1977). Fraud is not to be imputed or presumed. Beaver v.
Commissioner, 55 T.C. 85, 92 (1970).
Because fraud can rarely be shown by direct proof of a
taxpayer’s intention, it may be shown by means of circumstantial
evidence and reasonable inferences drawn from the facts. Spies
v. United States, 317 U.S. 492 (1943); Bradford v. Commissioner,
supra; Stone v. Commissioner, 56 T.C. 213, 223-224 (1971). The
taxpayer’s entire course of conduct may establish the requisite
fraudulent intent. Stone v. Commissioner, supra. Moreover, the
intent to conceal or mislead may be inferred from a pattern of
conduct. Spies v. United States, supra at 499.
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