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showing a consistent underreporting of income, when accompanied
by circumstances evidencing an intent to conceal, may justify a
strong inference of fraud. See Parks v. Commissioner, 94 T.C.
654, 664, (1990).
Additions to tax for fraud have been upheld where taxpayers
received income from illegal kickback schemes. See Tregre v.
Commissioner, T.C. Memo. 1996-243, affd. without published
opinion 129 F.3d 609 (5th Cir. 1997); DeVaughn v. Commissioner,
T.C. Memo. 1983-712; Hanhauser v. Commissioner, T.C. 1978-504.
These cases bear some factual similarities to the instant cases.
Factors Indicative of Fraudulent Intent
Courts have relied on a number of indicia of fraud in
deciding fraud cases. The existence of several indicia is
persuasive circumstantial evidence of fraud. See Solomon v.
Commissioner, 732 F.2d 1459, 1461 (6th Cir. 1984), affg. per
curiam T.C. Memo. 1982-603. A non-exclusive list of
circumstantial evidence which gives rise to a finding of
fraudulent intent includes: (1) a pattern of understating income
over an extended period of time; see Foster v. Commissioner, 391
F.2d 727, 733 (4th Cir. 1968), affg. in part, revg. in part T.C.
Memo. 1965-246); (2) implausible or inconsistent explanations of
behavior; see Bahoric v. Commissioner, 363 F.2d 151, 153 (9th
Cir. 1966); Factor v. Commissioner, 281 F.2d 100 (9th Cir. 1960),
affg. T.C. Memo. 1958-94; (3) failure to cooperate with tax
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