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T.C. 181, 199 (1976), affd. without published opinion 578 F.2d
1383 (8th Cir. 1978). Fraud is never presumed or imputed and
should not be found in circumstances which create at most only
suspicion. Toussaint v. Commissioner, 743 F.2d 309, 312 (5th
Cir. 1984), affg. T.C. Memo. 1984-25; Petzoldt v. Commissioner,
supra at 700. Direct evidence of the requisite fraudulent intent
is seldom available. Petzoldt v. Commissioner, supra at 699;
Rowlee v. Commissioner, 80 T.C. 1111, 1123 (1983). Consequently,
the Commissioner may prove fraud by circumstantial evidence.
Toussaint v. Commissioner, supra at 312; Rowlee v. Commissioner,
supra at 1123; see Marsellus v. Commissioner, 544 F.2d 883, 885
(5th Cir. 1977), affg. T.C. Memo. 1975-368.
The courts have identified a number of badges of fraud from
which fraudulent intent may be inferred, including (1) consistent
and substantial understatement of income, (2) failure to maintain
adequate records, (3) incomplete and erroneous information
provided to tax return preparer or bookkeeper, (4) destruction of
books and records, (5) implausible explanation of behavior,
(6) failure to cooperate with tax authorities, and (7) lack of
credibility of the taxpayer’s testimony. See Bradford v. Commis-
sioner, 796 F.2d 303, 307-308 (9th Cir. 1986), affg. T.C. Memo.
1984-601; Parks v. Commissioner, supra at 664-665. In addition,
the taxpayer’s background and the context of the events in
question may be considered circumstantial evidence of fraud.
Plunkett v. Commissioner, 465 F.2d 299, 303 (7th Cir. 1972),
affg. T.C. Memo. 1970-274; Niedringhaus v. Commissioner, supra at
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