Peter S. Pau and Susanna H. Pau - Page 18

                                       - 18 -                                         
          67 T.C. 181, 199 (1976), affd. without published opinion 578 F.2d           
          1383 (8th Cir. 1978).  Direct proof of intent is rarely                     
          available, so courts may look to circumstantial evidence and draw           
          reasonable inferences from the facts.  Spies v. United States,              
          317 U.S. 492 (1943); Bradford v. Commissioner, 796 F.2d 303, 307            
          (9th Cir. 1986), affg. T.C. Memo. 1984-601.  Fraud must be                  
          affirmatively established and is never imputed or presumed.                 
          Beaver v. Commissioner, 55 T.C. 85, 92 (1970).                              
               For the Commissioner to carry her burden of proving that the           
          underpayment of tax is attributable to fraud, she must show that            
          a taxpayer intended to conceal, mislead, or otherwise prevent the           
          collection of taxes.  Powell v. Granquist, 252 F.2d 56, 60-61               
          (9th Cir. 1958); Rowlee v. Commissioner, 80 T.C. 1111, 1123                 
          (1983).  A taxpayer's entire course of conduct can be indicative            
          of fraud.  Stone v. Commissioner, 56 T.C. 213, 224 (1971); Otsuki           
          v. Commissioner, 53 T.C. 96, 105-106 (1969).                                
               Over the years, courts have developed a nonexclusive list of           
          factors that demonstrate fraudulent intent.  These badges of                
          fraud include:  (1) Understating income, (2) keeping inadequate             
          records, (3) offering implausible or inconsistent explanations of           
          behavior, (4) concealing assets, and (5) failing to cooperate               
          with the Commissioner's agent.  See Bradford v. Commissioner,               
          supra at 303, and cases cited therein; Recklitis v. Commissioner,           
          91 T.C. 874, 910 (1988).  Although no single factor necessarily             
          suffices to establish fraud, a confluence of factors constitutes            




Page:  Previous  8  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  25  26  27  Next

Last modified: May 25, 2011