- 34 -
v. Commissioner, 67 T.C. 181, 199 (1976), affd. without published
opinion 578 F.2d 1383 (8th Cir. 1978). The taxpayer's entire
course of conduct may establish the requisite fraudulent intent.
Stone v. Commissioner, 56 T.C. 213, 223-224 (1971); Otsuki v.
Commissioner, 53 T.C. 96, 105-106 (1969).
Courts have developed several indicia or badges of fraud
which include: (1) Understatement of income, (2) inadequate
books and records, (3) failure to file tax returns, (4)
implausible or inconsistent explanations of behavior, (5)
concealment of income or assets, (6) failure to cooperate with
tax authorities, (7) filing false returns, (8) failure to make
estimated tax payments, (9) dealing in cash, (10) engaging in
illegal activity, and (11) attempting to conceal illegal
activity. Bradford v. Commissioner, 796 F.2d 303, 307 (9th Cir.
1986), affg. T.C. Memo. 1984-601; Recklitis v. Commissioner, 91
T.C. 874, 910 (1988). This list is nonexclusive. Miller v.
Commissioner, 94 T.C. 316, 334 (1990). Although petitioner
contends otherwise, several indicia of fraud are present in this
case.
a. Petitioner's Sophistication and Experience
The sophistication and experience of a taxpayer are relevant
in deciding whether fraud exists. Stephenson v. Commissioner, 79
T.C. 995, 1006 (1982), affd. 748 F.2d 331 (6th Cir. 1984).
Petitioner was a highly intelligent, astute, and successful
Page: Previous 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 NextLast modified: May 25, 2011