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be true and correct as to every material matter.7 The intent to
evade taxes is not an element of the crime charged under section
7206(1). Wright v. Commissioner, supra at 643; see also United
States v. Tsanas, 572 F.2d 340, 343 (2d Cir. 1978); United States
v. DiVarco, 484 F.2d 670, 673-674 (7th Cir. 1973); Siravo v.
United States, 377 F.2d 469, 472 n.4 (1st Cir. 1967).
Thus, although petitioner’s conviction under section 7206(1)
may be some evidence of fraudulent intent, it does not establish
as a matter of law that she intended to evade taxes. Wright v.
Commissioner, supra.
2. Badges of Fraud
A pattern of consistent underreporting of income, especially
when accompanied by other circumstances showing an intent to
conceal, justifies the inference of fraud. See Holland v. United
States, 348 U.S. 121, 137 (1954). The mere failure, however, to
report income is not sufficient to establish fraud. Merritt v.
Commissioner, 301 F.2d 484, 487 (5th Cir. 1962), affg. T.C. Memo.
1959-179; Korecky v. Commissioner, 781 F.2d 1566, 1568 (11th Cir.
1986), affg. T.C. Memo. 1985-63). Fraud may not be found under
"circumstances which at the most create only suspicion." Katz v.
Commissioner, 90 T.C. 1130, 1144 (1988).
Besides failure to report income, other badges of fraud
which may be taken into account include: the making of false and
inconsistent statements to revenue agents, Grosshandler v.
7 Petitioner's plea did not specifically mention the
embezzlement income.
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