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The Commissioner must prove that a portion of the
underpayment for each taxable year in issue was due to fraud.
Profl. Servs. v. Commissioner, 79 T.C. 888, 930 (1982). If the
Commissioner establishes that any portion of an underpayment in a
particular year is attributable to fraud, the entire underpayment
is 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.
Sec. 6663(b).
The existence of fraud is a question of fact to be resolved
from the entire record. Gajewski v. Commissioner, 67 T.C. 181,
199 (1976), affd. without published opinion 578 F.2d 1383 (8th
Cir. 1978).
Respondent has failed to meet his heavy burden of
establishing by clear and convincing evidence that petitioner had
the requisite fraudulent intent for any of the years at issue.
Several aspects of petitioner’s conduct are markedly inconsistent
with fraudulent intent. At her first meeting with Agent
Cedergreen, petitioner voluntarily disclosed the existence of her
personal accounts, the very accounts in which respondent alleges
that she hid her income. When petitioner discovered that the
first set of letters she had presented were not originals, she
disclosed that information to respondent. Petitioner also freely
disclosed her unreported tip income and that she had cash
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