- 31 -31
independent evidence. Beaver v. Commissioner, 55 T.C. 85, 92
(1970); Otsuki v. Commissioner, supra at 105. Fraud may be
proven by circumstantial evidence because direct evidence of the
taxpayer's intent is rarely available. Recklitis v.
Commissioner, supra at 910; Rowlee v. Commissioner, 80 T.C. 1111,
1123 (1983).
Circumstantial evidence of fraud includes:
(1) Consistent and substantial understatement of
income, (2) failure to maintain adequate records, (3)
failure to cooperate with an IRS investigation, (4)
inconsistent or implausible explanations of behavior
and (5) awareness of the obligation to file returns,
report income and pay taxes. [Douge v. Commissioner,
899 F.2d 164, 168 (2d Cir. 1990) (citing Bradford v.
Commissioner, 796 F.2d 303, 307-308 (9th Cir. 1986),
affg. T.C. Memo. 1984-601).]
Other badges of fraud include concealing assets, extensive
dealings in cash, Recklitis v. Commissioner, supra at 910,
failure to file timely returns, Kotmair v. Commissioner, 86 T.C.
1253, 1261 (1986), and failure to provide tax return preparers
with complete and accurate information, Korecky v. Commissioner,
781 F.2d 1566, 1569 (11th Cir. 1986), affg. T.C. Memo. 1985-63.
Ferrentino presented a cash hoard of $122,600 to the Federal
Reserve Bank in Buffalo, New York. According to the required
Currency Transaction Report, $75,000 of the amount presented was
in bills of $100 or higher. The record indicates that when
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