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(1) A large understatement of income, (2) inadequate records, and
(3) failure to cooperate with tax authorities. Bradford v.
Commissioner, 796 F.2d 303, 307-308 (9th Cir. 1986), affg. T.C.
Memo. 1984-601; Ruark v. Commissioner, 449 F.2d 311, 312-313 (9th
Cir. 1971), affg. T.C. Memo. 1969-48.
1. Large Understatement of Income
The deemed admissions establish that petitioner knowingly
underreported $94,469 in income for 1989 that he derived from
business, gambling, and barter activities, and that he knew that
gambling income was includable in income in the year of receipt.
2. Inadequate Records
A taxpayer's failure to maintain accurate records is a badge
of fraud. Merritt v. Commissioner, 301 F.2d 484, 487 (5th Cir.
1962), affg. T.C. Memo. 1959-172; Reaves v. Commissioner, 295
F.2d 336, 338 (5th Cir. 1961), affg. 31 T.C. 690 (1958). The
deemed admissions establish that petitioner's records were
incomplete and did not disclose all of his sources of income.
3. Failure To Cooperate With Tax Authorities
A taxpayer's failure to cooperate with the Commissioner's
examining agents is a badge of fraud. Bradford v. Commissioner,
supra. The deemed admissions establish that petitioner refused
to cooperate with respondent's examining agents, forcing them to
use alternative methods to reconstruct petitioner's income.
Respondent has established by clear and convincing evidence
that petitioner intended to evade tax. We conclude that
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