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Rule 142(b); DiLeo v. Commissioner, 96 T.C. 858, 873 (1991),
affd. 959 F.2d 16 (2d Cir. 1992).
"Facts deemed admitted pursuant to Rule 37(c) are considered
conclusively established and may be relied upon by the government
even in relation to issues where the government bears the burden
of proof." Baptiste v. Commissioner, 29 F.3d 1533, 1537 (11th
Cir. 1994), affg. T.C. Memo. 1992-198; see also Doncaster v.
Commissioner, 77 T.C. 334, 336-338 (1981) (holding that deemed
admissions under Rule 37(c) are sufficient to satisfy the
government's burden of proof with respect to the issue of fraud).
"Fraud is defined as an intentional wrongdoing designed to
evade tax believed to be owing." Petzoldt v. Commissioner, 92
T.C. 661, 698 (1989). Whether fraud exists is a question of fact
to be resolved upon review of the entire record. See Gajewski v.
Commissioner, 67 T.C. 181, 199 (1976), affd. without published
opinion 578 F.2d 1383 (8th Cir. 1978). Fraud will never be
presumed. See Beaver v. Commissioner, 55 T.C. 85, 92 (1970). It
may, however, be proved by circumstantial evidence. See Otsuki
v. Commissioner, 53 T.C. 96, 106 (1969). Courts have relied on a
number of indicia or badges of fraud in deciding whether to
sustain the Commissioner's determinations with respect to the
additions to tax for fraud including: (1) understating income,
(2) maintaining inadequate records, (3) failing to cooperate with
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