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opinion 578 F.2d 1383 (8th Cir. 1978). Fraud may be proven by
circumstantial evidence and reasonable inferences drawn from
proven facts because direct proof of a taxpayer's intent is
rarely available. Spies v. United States, 317 U.S. 492, 499
(1943); Rowlee v. Commissioner, 80 T.C. 1111 (1983). A
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, 53 T.C. 96, 105-106 (1969). The
intent to conceal or mislead may be inferred from a pattern of
conduct. Spies v. United States, supra at 499.
Respondent has established, and we have held that there are,
understatements of tax for 1982, 1983, and 1984. Respondent has
proven by clear and convincing evidence the existence of
understatements of tax in all of the years at issue. Having
proved understatements of tax, respondent must also prove that
some portion of each understatement is attributable to fraud.
The courts have developed a number of objective indicators
or "badges" of fraud. Recklitis v. Commissioner, 91 T.C. 874,
910 (1988). Evidence that may give rise to a finding of
fraudulent intent includes: (1) Understatement of income; (2)
inadequate or no records; (3) failure to file tax returns; (4)
implausible or inconsistent explanations of behavior; (5)
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