Jack R. Prewitt and Shelley Prewitt - Page 19

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          Cir. 1950); Petzoldt v. Commissioner, 92 T.C. 661, 700 (1989).              
          However, fraud may be proved by circumstantial evidence and                 
          reasonably inferred from the facts, because direct proof of the             
          taxpayer's intent is rarely available.  Spies v. United States,             
          317 U.S. 492 (1943); Rowlee v. Commissioner, supra; Stephenson v.           
          Commissioner, 79 T.C. 995 (1982), affd. 748 F.2d 331 (6th Cir.              
          1984).  A taxpayer's entire course of conduct may establish the             
          requisite fraudulent intent.  Stone v. Commissioner, 56 T.C. 213,           
          223-224 (1971); Otsuki v. Commissioner, supra at 105-106.  The              
          intent to conceal or mislead may be inferred from a pattern of              
          conduct.  See Spies v. United States, supra at 499.                         
               Courts have relied on several indicia of fraud when                    
          considering the section 6653(b) addition to tax.  Although no               
          single factor may conclusively establish fraud, the existence of            
          several indicia may be persuasive circumstantial evidence of                
          such.  Solomon v. Commissioner, 732 F.2d 1459, 1461 (6th Cir.               
          1984), affg. per curiam T.C. Memo. 1982-603; Beaver v.                      
          Commissioner, supra at 93.                                                  
               Circumstantial evidence that may give rise to a finding of             
          fraudulent intent includes:  (1) Understating income; (2) keeping           
          inadequate or no records; (3) failing to file tax returns;                  
          (4) maintaining implausible or inconsistent explanations of                 
          behavior; (5) concealing assets; (6) failing to cooperate with              
          tax authorities; (7) filing false Forms W-4; (8) failing to make            
          estimated tax payments; (9) dealing in cash; (10) engaging in               
          illegal activity; and (11) attempting to conceal an illegal                 



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