- 14 -
7454(a); Rule 142(b); Clayton v. Commissioner, 102 T.C. 632, 646
(1994); King's Court Mobile Home Park, Inc. v. Commissioner, 98
T.C. 511, 515-516 (1992). Since we have already decided that
petitioners underpaid their Federal income taxes in 1991 and
1992, we need only address the issue of whether a part of that
underpayment is due to fraud.
Fraud is established by proving that a taxpayer intended to
evade tax believed to be owing by conduct intended to conceal,
mislead, or otherwise prevent the collection of such tax.
Clayton v. Commissioner, supra at 647. Direct evidence of the
requisite fraudulent intent is seldom available, but fraud may be
proved by examining circumstantial evidence indicative of the
taxpayer's motives. Recklitis v. Commissioner, 91 T.C. 874, 910
(1988). Over the years, courts have developed various factors,
or "badges", which tend to establish the existence of fraud. See
Clayton v. Commissioner, supra at 647.
Respondent contends that petitioners fraudulently attempted
to evade the payment of tax by misrepresenting that their
personal residence at 1419 Zunis Avenue was a property used
exclusively for business purposes. Petitioners maintain that
although petitioner wife did live at that residence at one time,
she and petitioner husband moved out of that house prior to the
taxable years in issue.
We find that respondent has clearly and convincingly proven
that petitioners fraudulently claimed 1419 Zunis Avenue as
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