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addition to tax is equal to 5 percent of the amount required to
be shown as tax on the return, with an additional 5 percent for
each additional month or fraction thereof during which such
failure continues, not exceeding 25 percent in the aggregate.
If, however, the failure to file any return is fraudulent, then
the addition to tax is equal to 15 percent of the amount required
to be shown as tax on the return, with an additional 15 percent
for each additional month or fraction thereof during which such
failure continues, not exceeding 75 percent in the aggregate.
Sec. 6651(f). Respondent has determined that petitioner’s
failure to file for the years in issue was fraudulent.
The Commissioner must prove fraud by clear and convincing
evidence. See sec. 7454(a); Rule 142(b); Clayton v.
Commissioner, 102 T.C. 632, 646 (1994). In determining whether
petitioner’s failure to file was fraudulent within the meaning of
section 6651(f), we consider the same elements that are relevant
in imposing the penalty for underpayment of tax due to fraud
under section 6663. Clayton v. Commissioner, supra at 653.
Establishing fraud requires proof that the taxpayer “acted
with an intent to evade paying taxes” and may be proved by
circumstantial evidence. Douge v. Commissioner, 899 F.2d 164,
168 (2d Cir. 1990), affg. in part and revg. in part and remanding
an order of this Court dated June 6, 1988. “Such evidence may
include (1) consistent and substantial understatement of income,
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