- 43 -
Commissioner, 102 T.C. 632, 646 (1994); Recklitis v. Commissioner, 91
T.C. 874, 909 (1988).
With regard to fraudulent intent, respondent is required to
prove that a taxpayer intended to evade taxes by conduct intended to
conceal, mislead, or otherwise prevent the collection of taxes. Zell
v. Commissioner, 763 F.2d 1139 (10th Cir. 1985), affg. T.C. Memo.
1984-152; Parks v. Commissioner, 94 T.C. at 661; Hebrank v.
Commissioner, 81 T.C. 640, 642 (1983). Because direct evidence of
fraud is not generally available, fraud often must be established by
circumstantial evidence. Clayton v. Commissioner, supra at 647;
Rowlee v. Commissioner, 80 T.C. 1111, 1123 (1983).
Courts have developed certain indicia of fraud, including the
following: (1) Understatements of income; (2) inadequate books and
records; (3) failure to file income tax returns; (4) implausible or
inconsistent explanations of behavior; (5) concealed assets; (6)
failure to cooperate with tax authorities; (7) dealing in cash; and
(8) filing false documents. Bradford v. Commissioner, 796 F.2d 303,
307-308 (9th Cir. 1986), affg. T.C. Memo. 1984-601. The level of
sophistication and intelligence of taxpayers may also be considered.
See Niedringhaus v. Commissioner, 99 T.C. 202, 211 (1992).
For the years before us, where respondent proves that any part
of a taxpayer's underpayment of income tax is due to fraud, fraud is
presumed with respect to the entire underpayment unless a taxpayer
Page: Previous 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 NextLast modified: May 25, 2011