- 61 -
supra at 223-224; Otsuki v. Commissioner, 53 T.C. 96,
105-106 (1969).
Courts have developed several indicia or "badges of
fraud." These "badges of fraud" include: (1) Understating
income; (2) maintaining inadequate records; (3) failing to
file tax returns; (4) implausible or inconsistent explana-
tions of behavior; (5) concealing income or assets; (6)
failing to cooperate with tax authorities; (7) engaging in
illegal activities; (8) an intent to mislead which may be
inferred from a pattern of conduct; (9) lack of credibility
of the taxpayer's testimony; (10) filing false documents;
and (11) dealing in cash. Spies v. United States, 317 U.S.
492, 499 (1943); Bradford v. Commissioner, 796 F.2d 303,
307-308 (9th Cir. 1986), affg. T.C. Memo. 1984-601;
Recklitis v. Commissioner, supra at 910. Although no
single factor is necessarily sufficient to establish fraud,
the combination of a number of factors may be persuasive
evidence of fraud. Solomon v. Commissioner, 732 F.2d 1459,
1461 (6th Cir. 1984), affg. per curiam T.C. Memo. 1982-603.
A taxpayer's intelligence and education are also relevant
for purposes of determining fraudulent intent. Stephenson
v. Commissioner, supra at 1006.
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