Rebecca Wright - Page 10




                                       - 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                  





Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  Next

Last modified: May 25, 2011