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evidence of fraud. Johnson v. Commissioner, T.C. Memo. 1993-227.
These indicia or badges of fraud include: (1) Understating
income; (2) maintaining inadequate records; (3) giving
implausible or inconsistent explanations of behavior; (4)
concealing assets; and (5) dealing in cash. Meier v.
Commissioner, 91 T.C. 273 (1988); Bragg v. Commissioner, T.C.
Memo. 1993-479. 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. Spies v. United States, supra
at 497. However, the mere failure to report income is not
sufficient to establish fraud. Rowlee v. Commissioner, supra at
1123. On the other hand, consistent and substantial
understatements of large amounts of taxable income over a period
of years have been held to be strong evidence of fraud. Smith v.
Commissioner, 32 T.C. 985, 987 (1959).
Considering petitioner's entire course of conduct, the
record provides us with ample basis for finding that the
underpayment of tax for each taxable year at issue is due to
fraud on the part of petitioner. See Kotmair v. Commissioner,
supra at 1260.
Respondent has shown the existence of multiple indicia of
fraud. Petitioners concede that they underreported income
resulting in underpayments of tax for each taxable year at issue.
The unreported income in each year is most conspicuous here with
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