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reasonable inferences may be drawn from the relevant facts.
Spies v. United States, 317 U.S. 492, 499 (1943); Stephenson v.
Commissioner, 79 T.C. 995, 1006 (1982), affd. 748 F.2d 331 (6th
Cir. 1984); Collins v. Commissioner, T.C. Memo. 1994-409.
We often rely on certain indicia of fraud in deciding the
existence of fraud. Although no single factor is necessarily
sufficient to establish fraud, the presence of several indicia is
persuasive circumstantial evidence of fraud. Beaver v.
Commissioner, 55 T.C. 85, 93 (1970). The "badges of fraud"
include: (1) Understatement of income; (2) inadequate records;
(3) failure to file tax returns; (4) implausible or inconsistent
explanations of behavior; (5) concealing assets; (6) failure to
cooperate with tax authorities; (7) income from illegal
activities; (8) an intent to mislead which may be inferred from a
pattern of conduct; and (9) dealings in cash. Bradford v.
Commissioner, 796 F.2d 303, 307 (9th Cir. 1986), affg. T.C. Memo.
1984-601; Petzoldt v. Commissioner, 92 T.C. 661, 699 (1989);
Rowlee v. Commissioner, supra at 1125. These "badges of fraud"
are nonexclusive, Niedringhaus v. Commissioner, 99 T.C. 202, 211
(1992), and the taxpayer's education and business background are
relevant to the determination of fraud, see Wheadon v.
Commissioner, T.C. Memo. 1992-633.
First, we recognize that petitioner was convicted of income
tax evasion pursuant to section 7201 for his 1987 tax year. As a
result, petitioner is collaterally estopped from denying
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