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II. Fraud
We decide whether petitioner is liable for the fraud penalty
determined by respondent under section 6663(a).7 Respondent must
prove that determination by clear and convincing evidence. See
sec. 7454(a); Rule 142(b); Rowlee v. Commissioner, 80 T.C. 1111,
1113 (1983). Respondent must prove that petitioner fraudulently
intended to underpay her tax. See Powell v. Granquist, 252 F.2d
56 (9th Cir. 1958); Miller v. Commissioner, 94 T.C. 316, 332-333
(1990). Respondent may meet his burden through affirmative
evidence because fraud is never imputed or presumed. Beaver v.
Commissioner, 55 T.C. 85, 92 (1970). Whether fraud exists in a
given situation is a factual determination that must be made
after reviewing the particular facts and circumstances of the
case. DiLeo v. Commissioner, 96 T.C. 858, 874 (1991), affd.
959 F.2d 16 (2d Cir. 1992).
7 In relevant part, sec. 6663 provides:
SEC. 6663. IMPOSITION OF FRAUD PENALTY.
(a) Imposition of Penalty.--If any part of any
underpayment of tax required to be shown on a return is
due to fraud, there shall be added to the tax an amount
equal to 75 percent of the portion of the underpayment
which is attributable to fraud.
(b) Determination of Portion Attributable to
Fraud.--If the Secretary establishes that any portion
of an underpayment is attributable to fraud, the entire
underpayment shall be treated as attributable to fraud,
except with respect to any portion of the underpayment
which the taxpayer establishes (by a preponderance of
the evidence) is not attributable to fraud.
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