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evade tax known or believed to be owing by conduct intended to
conceal, mislead, or otherwise prevent the collection of taxes.
See Korecky v. Commissioner, 781 F.2d 1566, 1568 (11th Cir.
1986), affg. T.C. Memo. 1985-63.
Fraud is never presumed but must be proved by clear and
convincing evidence. See Petzoldt v. Commissioner, supra at 699.
Because direct proof of a taxpayer’s intent is rarely available,
however, fraudulent intent may be established by various kinds of
circumstantial evidence, or “badges of fraud”, including
consistent, material understatements of income; the filing of
false statements or documents; failure to maintain complete and
accurate records; the concealing of assets or covering up sources
of income; failure to cooperate fully with the Internal Revenue
Service; implausible or inconsistent explanations of behavior;
illegal activity; and attempted concealment thereof. See Spies
v. United States, 317 U.S. 492, 499 (1943); Bradford v.
Commissioner, 796 F.2d 303, 307 (9th Cir. 1986), affg. T.C. Memo.
1984-601; Korecky v. Commissioner, supra at 1568; Stephenson v.
Commissioner, 79 T.C. 995, 1005-1006 (1982), affd. 748 F.2d 331
(6th Cir. 1984).
The Gas Rebate Payments
Petitioners’ consistent and substantial omission of the gas
rebate payments from gross income over 3 years is persuasive
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