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2. Fraudulent Intent
The second element requires the Commissioner to prove
fraudulent intent on the part of the taxpayer. Fraud will never
be presumed. Beaver v. Commissioner, 55 T.C. 85, 92 (1970).
Respondent may prove fraud through circumstantial evidence, as
direct proof of the taxpayer's intent is rarely available. The
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.
Courts have developed various factors or "badges" that tend
to establish fraud. Recklitis v. Commissioner, 91 T.C. 874, 910
(1988). These include: (1) A pattern of understatement of
income; (2) inadequate records; (3) concealment of assets; (4)
income from illegal activities; (5) attempting to conceal illegal
activities; (6) implausible or inconsistent explanations of
behavior; and (7) dealing in cash. Id. Repeated understatements
in successive years, when coupled with other circumstances
showing an intent to conceal or misstate taxable income, present
a basis on which we may properly infer fraud. Patton v.
Commissioner, 799 F.2d 166, 171 (5th Cir. 1986), affg. T.C. Memo.
1985-148.
We believe petitioner’s underpayments to have been due to
fraud. Petitioner was convicted for being a part of a conspiracy
to defraud the United States. He received bribes during the
years in issue. Petitioner was employed as a revenue agent at
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