John Devlin - Page 9

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          evaluating petitioner's fraudulent intent under section 6651(f),            
          we consider the same elements as are relevant for section 6663              
          and former section 6653(b).  See Clayton v. Commissioner, 102               
          T.C. 632, 652-653 (1994).                                                   
               Over the years, courts have developed a number of objective            
          factors, or "badges", that tend to establish fraud.  Recklitis v.           
          Commissioner, 91 T.C. 874, 910 (1988).  These badges include:               
          (1) A pattern of understatement of income, (2) inadequate books             
          and records, (3) failure to file tax returns, (4) concealment of            
          assets, (5) failure to cooperate with tax authorities, (6) income           
          from illegal activities, (7) implausible or inconsistent explana-           
          tions of behavior, (8) an intent to mislead which may be inferred           
          from a pattern of conduct, (9) lack of credibility of the tax-              
          payer's testimony, and (10) dealings in cash.  Laurins v. Commis-           
          sioner, 889 F.2d 910, 913 (9th Cir. 1989), affg. Norman v. Com-             
          missioner, T.C. Memo. 1987-265; Edelson v. Commissioner, 829 F.2d           
          828, 832 (9th Cir. 1987), affg. T.C. Memo. 1986-223; Petzoldt v.            
          Commissioner, supra at 699; Rowlee v. Commissioner, 80 T.C. 1111,           
          1125 (1983).  Though this list of the badges of fraud is nonex-             
          clusive, it is illustrative.  Miller v. Commissioner, 94 T.C.               
          316, 334 (1990).                                                            
               Respondent based the Motion for Summary Judgment on the                
          facts set forth in respondent's requests for admission, which               
          were deemed admitted.  Matters deemed admitted pursuant to Rule             
          90 are conclusively established and may be sufficient to support            




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