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existing case law: (1) Understatement of income; (2) inadequate
records; (3) failure to file tax returns; (4) implausible or
inconsistent explanations of behavior; (5) concealing assets; and
(6) failure to cooperate with tax authorities. The Court of
Appeals also identified dealing in cash as an additional fact
which would support a finding of fraud. Id. at 308.
Applying these considerations to the case at bar, we
conclude that petitioner fraudulently intended to underpay tax
for each of the years at issue. The record unequivocably
demonstrates that petitioner understated his income, maintained
inadequate records, failed to cooperate with taxing authorities,
and engaged in extensive dealings in cash. Moreover, the
evidence reveals that petitioner expressly directed the
preparation of false business records to conceal a significant
percentage of his cash transactions and then himself provided
those erroneous records to his return preparer. The only logical
inference to be drawn from such circumstances is that petitioner
knowingly and actively structured his affairs with the specific
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Last modified: May 25, 2011