- 17 -
presumed. Cochrane v. Commissioner, 107 T.C. 18, 28 (1996).
Since direct proof of a taxpayer's intent is rarely available,
fraud may be established by circumstantial evidence and
reasonable inferences drawn from such evidence. Korecky v.
Commissioner, supra; Cochrane v. Commissioner, supra. The
taxpayer's entire course of conduct may establish the requisite
fraudulent intent. Bagby v. Commissioner, 102 T.C. 596, 609
(1994). Mere failure to file tax returns is not sufficient to
establish fraud. Kotmair v. Commissioner, 86 T.C. 1253, 1261
(1986).
Respondent points to the purchase of substantial assets as
one indicator of petitioners' fraud. Respondent also alleges
that petitioners chose tax-free bonds as their investment vehicle
so as to avoid the reporting of taxable interest. However, only
$10,000 of bonds were purchased during the years at issue and
that purchase occurred on December 30, 1983. Petitioners
purchased the sailboat and the warehouses in 1985 and 1986,
respectively. Respondent has not shown a connection between the
unreported income for the years 1982 and 1983 and these assets.
The latter purchases and the convictions for criminal tax evasion
for the years 1984 through 1986 do not shed any light on
petitioners' intent with respect to the years at issue in the
instant case. The use of one's maiden name alone is not
indicative of fraud, particularly where, as here, Mrs. Miravalle
used her maiden name for business purposes.
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