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inadequate books and records, (3) failing to file tax returns,
(4) giving implausible or inconsistent explanations of behavior,
(5) concealing assets, (6) failing to cooperate with taxing
authorities, (7) engaging in illegal activities, (8) attempting
to conceal illegal activities, (9) dealing in cash, and (10)
failing to make estimated tax payments. Recklitis v.
Commissioner, 91 T.C. 874, 910 (1988). Although no single factor
is necessarily dispositive on the issue of fraud, the existence
of several indicia is persuasive circumstantial evidence.
Petzoldt v. Commissioner, supra at 700. We proceed by addressing
the indicia of fraud that are relevant to the case at hand.
Respondent has affirmatively shown various indicia of fraud
committed by petitioner. First, petitioner's understatement of
income in 1984 and 1985 indicates fraud. Through the deemed
admitted facts, respondent has established that over a 2-year
period petitioner engaged in a pattern of concealing substantial
amounts of income. Petitioner received substantial income from
his involvement in the investment scheme in 1984 and 1985 which
he failed to report on his 1984 and 1985 Federal income tax
returns. This is strong evidence of an intent to evade tax.
Merritt v. Commissioner, 301 F.2d 484, 487 (5th Cir. 1962), affg.
T.C. Memo. 1959-172.
Second, the handling of one's affairs in such a way as to
avoid making records usual in transactions, the concealment of
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