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attributable to fraud and subjected to a 75-percent penalty,
unless the taxpayer establishes that some part of the
underpayment is not attributable to fraud. Sec. 6663(b).
Respondent must show that the taxpayer intended to conceal,
mislead, or otherwise prevent the collection of taxes. Katz v.
Commissioner, 90 T.C. 1130, 1143 (1988); Rowlee v. Commissioner,
80 T.C. 1111, 1123 (1983).
The existence of fraud is a question of fact to be resolved
upon consideration of the entire record. King’s Court Mobile
Home Park, Inc. v. Commissioner, 98 T.C. 511, 516 (1992). Fraud
will never be presumed. Id.; Beaver v. Commissioner, 55 T.C. 85,
92 (1970). Fraud may, however, be proved by circumstantial
evidence and inferences drawn from the facts because direct proof
of a taxpayer’s intent is rarely available. Niedringhaus v.
Commissioner, 99 T.C. 202, 210 (1992). The taxpayer’s entire
course of conduct may establish the requisite fraudulent intent.
Stone v. Commissioner, 56 T.C. 213, 223-224 (1971).
Respondent must prove fraudulent intent. Fraudulent intent
may be inferred from various kinds of circumstantial evidence, or
“badges of fraud”, including a consistent understatement of
income, inadequate records, implausible or inconsistent
explanations of behavior, failure to cooperate with tax
authorities, and dealing with cash. Bradford v. Commissioner,
796 F.2d 303, 307 (9th Cir. 1986), affg. T.C. Memo. 1984-601. A
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