- 25 -                                         
             books and records, see Merritt v. Commissioner, 301 F.2d                 
             484, 487 (5th Cir. 1962), affg. T.C. Memo. 1959-172; (3)                 
             false entries on or alterations of documents, see Spies v.               
             United States, 317 U.S. 492, 499 (1943); (4) failure to                  
             file tax returns, see id.; (5) implausible or inconsistent               
             explanations of behavior, see Grosshandler v. Commissioner,              
             75 T.C. 1, 20 (1980); (6) concealment of income or assets,               
             see Bradford v. Commissioner, 796 F.2d 303, 307 (9th Cir.                
             1986), affg. T.C. Memo. 1984-601; (7) dealing in cash; and               
             (8) failure to cooperate with tax authorities, see id. at                
             307-308.                                                                 
                  Respondent argues that Mr. Vetrano’s conduct exhibit                
             the following badges of fraud:                                           
                  Vetrano engaged in a 3-year pattern of under-                       
                  stating income.  He took steps to cover up the                      
                  source of his income.  He dealt in cash to avoid                    
                  scrutiny of his finances.  He structured his                        
                  affairs to avoid making records the effect of                       
                  which was to mislead or conceal.  He failed to                      
                  keep adequate and accurate records.  Not only did                   
                  Vetrano fail to cooperate with tax authorities in                   
                  computing his correct income, he deliberately                       
                  misled the examining agent by having his                            
                  representative supply a false list of suppliers                     
                  to him.  He willingly defrauded others and was                      
                  dishonest in business and personal transactions,                    
                  particularly with respect to statements made in                     
                  the New Jersey court which was adjudicating his                     
                  divorce from Teresa Vetrano.  He possessed                          
                  sufficient education and knowledge of his duty to                   
                  report income.  He provided implausible and false                   
                  explanations, such as that he was not in the auto                   
                  parts business but was a bricklayer, when he                        
                  admittedly had earned no income from 1991 through                   
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