Manuel and Margaret Karcho - Page 26




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          1972), affg. T.C. Memo. 1970-274; Tomlinson v. Lefkowitz, 334               
          F.2d 262, 265 (5th Cir. 1964).                                              
               Absent such estoppel, the existence of fraud is a question             
          of fact to be decided on consideration 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).  Because direct            
          proof is seldom available, fraud may be proven by circumstantial            
          evidence.  See Stephenson v. Commissioner, 79 T.C. 995, 1005-1006           
          (1982), affd. 748 F.2d 331 (6th Cir. 1984); Otsuki v.                       
          Commissioner, 53 T.C. 96, 105-106 (1969).  Moreover, the                    
          taxpayer's entire course of conduct may establish fraud, see                
          Spies v. United States, 317 U.S. 492 (1943), and in determining             
          fraud, we take into account the taxpayer's experience and                   
          education; see Solomon v. Commissioner, 732 F.2d 1459, 1461-1462            
          (6th Cir. 1984), affg. per curiam T.C. Memo. 1982-603.                      
               Keeping a second set of false records creates an especially            
          strong inference of an intent to defeat or evade taxes.  See                
          Spies v. United States, supra at 499; Lee v. Commissioner, T.C.             
          Memo. 1995-597; Raeder v. Commissioner, T.C. Memo. 1965-230; 57             
          Herkimer St. Corp. v. Commissioner, T.C. Memo. 1961-223, affd.              
          per curiam 316 F.2d 726 (5th Cir. 1963).  Other indicia or                  
          "badges" of fraud include: (1) Understating income; (2) failure             
          to report income over an extended period of time; (3) giving                
          implausible or inconsistent explanations of behavior; (4)                   





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