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The determination of fraud for purposes of section
6501(c)(1) is the same as the determination of fraud for purposes
of the penalty under section 6663. Neely v. Commissioner, 116
T.C. 79, 85 (2001); Rhone-Poulenc Surfactants & Specialties v.
Commissioner, 114 T.C. 533, 548 (2000). Respondent has the
burden of showing fraud by clear and convincing evidence. See
sec. 7454(a); Rule 142(b).
Petitioner’s conviction under section 7206(1) does not prove
fraud; respondent must show that petitioner intended to evade tax
in filing the false returns. See Wright v. Commissioner, 84 T.C.
636, 643 (1985). For Federal tax purposes, fraud entails
intentional wrongdoing with the purpose of evading a tax believed
to be owing. See Neely v. Commissioner, supra at 86. In order
to show fraud, respondent must prove: (1) An underpayment
exists; and (2) petitioner intended to evade taxes known to be
owing by conduct intended to conceal, mislead, or otherwise
prevent the collection of taxes. See Parks v. Commissioner, 94
T.C. 654, 660-661 (1990).
A. Underpayment of Tax
Respondent must first show by clear and convincing evidence
that petitioner made an underpayment of tax in each of 1990,
1991, 1992, and 1993. Respondent may not rely on petitioner’s
failure to carry his burden of proof to sustain respondent’s
burden of proving fraud. See id. at 661. We conclude that
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