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may prove fraud by circumstantial evidence because direct
evidence of the taxpayer's intent is rarely available. See
Stephenson v. Commissioner, 79 T.C. 995, 1005-1006 (1982), affd.
748 F.2d 331 (6th Cir. 1984).
Petitioner recognizes that he is collaterally estopped from
contesting each element of section 7203. Thus, he does not
dispute that he is collaterally estopped from denying that he
knew he had the duty to maintain records or supply information
and that he willfully failed to do so for 1988 and 1989. See
Kotmair v. Commissioner, 86 T.C. 1253, 1264 (1986). Petitioner's
conviction under section 7203 does not estop him from arguing
that he lacked fraudulent intent for 1988 and 1989, but it is
evidence that he committed fraud. See Wilkinson v. Commissioner,
T.C. Memo. 1997-410.
4. Badges of Fraud
Courts have developed several objective indicators, or
"badges", of fraud. See Recklitis v. Commissioner, 91 T.C. 874,
910 (1988). Respondent argues that the following badges of fraud
are present in this case: (1) Large understatements of income;
(2) inadequate books and records; (3) failure to give accurate
information to tax return preparer; (4) failure to cooperate with
tax authorities; (5) implausible and inconsistent explanations of
behavior; and (6) training, business experience, and knowledge of
the income tax laws.
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