- 34 -
single factor may be necessarily sufficient to establish fraud,
the existence of several indicia may be persuasive circumstantial
evidence of fraud. 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 which may give rise to a finding of
fraudulent intent includes: (1) Understatement of income; (2)
inadequate records; (3) failure to file tax returns; (4)
implausible or inconsistent explanations of behavior; (5)
concealment of assets; (6) failure to cooperate with tax
authorities; (7) filing false Forms W-4; (8) failure to make
estimated tax payments; (9) dealing in cash; (10) engaging in
illegal activity; and (11) attempting to conceal illegal
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, 94 T.C. at 334. 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; United States v. Murdock, 290 U.S.
389, 395 (1933), overruled on another issue Murphy v. Waterfront
Commn., 378 U.S. 52 (1964); Plunkett v. Commissioner, 465 F.2d at
303.
Considering the record as a whole, we conclude that there
are sufficient badges of fraud to carry respondent’s burden of
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