- 10 -
the underpayment was due to fraud. See Clayton v. Commissioner,
102 T.C. 632, 646 (1994); Recklitis v. Commissioner, 91 T.C. 874,
909 (1988).
Fraud is established by proving that a taxpayer intended to
evade tax believed to be owing by conduct intended to conceal,
mislead, or otherwise prevent the collection of such tax. The
Commissioner need not establish that tax evasion was a primary
motive of the taxpayer but may satisfy the burden by showing that
a tax-evasion motive played any part in the taxpayer's conduct,
including conduct designed to conceal another crime. See Clayton
v. Commissioner, supra at 647; Recklitis v. Commissioner, supra
at 909.
Fraudulent intent may be established by circumstantial
evidence and reasonable inferences drawn from the record. See
Clayton v. Commissioner, supra at 647. In Bradford v.
Commissioner, 796 F.2d 303, 307-308 (9th Cir. 1986), affg. T.C.
Memo. 1984-601, the U.S. Court of Appeals for the Ninth Circuit
articulated a nonexclusive list of factors which demonstrate
fraudulent intent. These "badges of fraud" include: (1)
Understating income; (2) maintaining inadequate records; (3)
failing to file tax returns; (4) giving implausible or
inconsistent explanations of behavior; (5) concealing assets; (6)
failing to cooperate with tax authorities; (7) engaging in
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