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unsubstantiated expenses. We sustain the disallowance of these
claimed deductions as determined by respondent.
Fraud Penalty
The penalty in the case of fraud is a civil sanction
provided primarily as a safeguard for the protection of the
revenue and to reimburse the Government for the heavy expense of
investigation and the loss resulting from the taxpayer’s fraud.
Helvering v. Mitchell, 303 U.S. 391, 401 (1938); Sadler v.
Commissioner, 113 T.C. 99, 102 (1999). Respondent has the burden
of proving, by clear and convincing evidence, an underpayment for
the years in issue and that some part of the underpayment for
those years is due to fraud. Sec. 7454(a); Rule 142(b). 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,
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