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(a) The badges of fraud
To that end, courts have, in the past, developed a non-
exhaustive list of the "badges of fraud". Bradford v.
Commissioner, 796 F.2d 303, 307 (9th Cir. 1986), affg. T.C. Memo.
1984-601; Douge v. Commissioner, 899 F.2d 164, 168 (2d Cir.
1990), affg. in part and revg. and remanding in part an Oral
Opinion of this Court. Respondent's brief does little more than
recite the badges without fully developing why their presence
shows fraudulent intent for 1986 and 1987. In most cases, courts
can infer a causal connection. But, the presence of
contradictory evidence in this record makes these indicia
insufficient by themselves to allow us to infer fraudulent
intent. However, they still provide part of the foundation for
that inference, and, hence, must be developed.
(i) Taxpayer's experience and sophistication
Petitioner's relative experience and sophistication are
relevant in determining whether fraud exists. Stephenson v.
Commissioner, 79 T.C. at 1006. While petitioner was not an
astute businessman of the degree of sophistication described in
Zand v. Commissioner, T.C. Memo. 1996-19, he nevertheless
participated directly in the laundering of Ben's drug profits
during a period that not only encompassed the 2 years in
question, but went back as far as 1977, when he "invested"
$80,000 in Sam Gilbert's enterprises on Ben's behalf, and 1983,
when he participated in the initial discussions on how to invest
in the card club.
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