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Respondent contends that the following facts, taken as a
whole, prove that petitioner had the intent to fraudulently evade
paying income tax on at least some part of the underpayment for
the years in issue: (1) His failure to file income tax returns
for the years 1986 through 1991; (2) through that failure to
file, a corresponding consistent failure to report substantial
amounts of income from the logging business; (3) the failure to
maintain books and records of the amounts derived from the
logging business; (4) his failure to pay estimated income taxes
for the years in question; and (5) the cashing, rather than
depositing, of checks derived from the logging business.
In the instant case, petitioner did not file income tax
returns for the taxable years 1986 through 1991. The parties
have stipulated this fact. It is also without dispute that
petitioner did not report relatively large amounts of income and
expenses in connection with his logging business.
An initial analysis reveals that some of the badges of fraud
are present. Petitioner earned substantial amounts of income
that were not reported, did not keep adequate records, and failed
to provide records to or meet with respondent's agent. Due to
the 1989 audit of his 1985 Federal income tax return and the
seizure of his bank account, petitioner decided to close his bank
account and, to some extent, deal in cash. Petitioner, however,
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