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of income, (2) maintenance of inadequate records, (3) implausible
or inconsistent explanations of behavior, (4) concealment of
assets, (5) failure to cooperate with tax authorities,
(6) engaging in an illegal activity, (7) attempting to conceal an
illegal activity, and (8) dealing in cash. Bradford v.
Commissioner, 796 F.2d 303, 307 (9th Cir. 1986), affg. T.C. Memo.
1984-601; Petzoldt v. Commissioner, 92 T.C. 661, 700 (1989).
Respondent argues that he has clearly and convincingly
proven fraud by virtue of the following claimed actions on the
part of Mr. Feinsmith: (1) That he understated his income and
the income of Randy Hall for the relevant years, (2) that he
failed to maintain adequate records for Randy Hall, including
that some of the maintained records were false invoices, (3) that
his accountant testified that Mr. Feinsmith did not tell the
accountant when the accountant prepared Mr. Feinsmith’s 1983 and
1984 personal income tax returns that he had income from the
scheme, (4) that he was engaged in the scheme, an illegal
activity, (5) that the scheme involved the use of cash, and (6)
that he was an astute businessman. Petitioner argues that
respondent has not proven fraud either clearly or convincingly.
We agree with petitioner. We are unconvinced by the record that
Mr. Feinsmith filed either his 1983 or 1984 Federal income tax
return with the requisite intent to evade a personal Federal
income tax known or believed to be owing.
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