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If respondent establishes that any portion of the underpayment is
attributable to fraud, the entire underpayment is treated as
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).
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). Fraudulent
intent may be inferred from various kinds of circumstantial
evidence, or “badges of fraud”, including the consistent
understatement of income, inadequate records, failure to file tax
returns, implausible or inconsistent explanations of behavior,
concealing assets, and failure to cooperate with tax authorities.
Bradford v. Commissioner, 796 F.2d 303, 307 (9th Cir. 1986),
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