-7-
See Clayton v. Commissioner, 102 T.C. 632, 653 (1994); see also
Temple v. Commissioner, T.C. Memo. 2000-337, affd. 62 Fed. Appx.
605 (6th Cir. 2003).
To establish fraud, the Commissioner must show by clear and
convincing evidence that there is an underpayment and that a
portion of the underpayment is attributable to fraud. See sec.
7454(a); Rule 142(b); Hagaman v. Commissioner, 958 F.2d 684, 696
(6th Cir. 1992), affg. and remanding T.C. Memo. 1990-655;
Petzoldt v. Commissioner, 92 T.C. 661, 669 (1989). If the
Commissioner establishes that any portion of an underpayment is
attributable to fraud, the entire underpayment shall be treated
as attributable to fraud, except to the extent the taxpayer
establishes otherwise. See sec. 6663(b); Hagaman v.
Commissioner, supra at 696; Marretta v. Commissioner, T.C. Memo.
2004-128, affd. 168 Fed. Appx. 528 (3d Cir. 2006).
The existence of fraud is a question of fact established by
consideration of the entire record. Petzoldt v. Commissioner,
supra at 699. Fraud is established through proof “that the
taxpayer intended to evade tax believed to be owing by conduct
intended to conceal, mislead, or otherwise prevent the collection
of such tax.” Recklitis v. Commissioner, supra at 909; see also
Hagaman v. Commissioner, supra at 696. Because direct proof of
fraud is seldom available, fraud may be proved by circumstantial
evidence and reasonable inferences from the facts. United States
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