- 20 -
activity. Bradford v. Commissioner, 796 F.2d 303, 307 (9th Cir.
1986), affg. T.C. Memo. 1984-601; see Douge v. Commissioner, 899
F.2d 164, 168 (2d Cir. 1990). These "badges of fraud" are
nonexclusive. Miller v. Commissioner, supra at 334. Both the
taxpayer's background and the context of the events in question
may be considered as circumstantial evidence of fraud. United
States v. Murdock, 290 U.S. 389, 395 (1933); Spies v. United
States, supra at 497; Plunkett v. Commissioner, supra at 303.
Respondent argues that petitioners knowingly failed to
report $81,000 ($60,000 plus $21,000) for 1983 and that
petitioner pled guilty to violating section 7206(1) with respect
to the $21,000 item. Although petitioner pled guilty to
violation of section 7206(1), he is not estopped to deny that his
1983 tax return was fraudulent within the meaning of section
6653(b). Wright v. Commissioner, 84 T.C. 636 (1985).
Petitioner, however, is estopped to deny that he filed a
materially false return under section 7206(1). Id.
Petitioners do not deny that the $81,000 was omitted;
however, they assert that they failed to claim more than $80,0004
of deductions on their 1983 return. The $81,000 omission is
probative evidence. Petitioners' contention that they were
entitled to unclaimed and offsetting deductions for 1983 does not
lessen the impact of petitioners' intentional failure to report
income.
4 We have found that the amount allowable for 1983 totals
$33,000.
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