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respondent has fulfilled the second element of fraud which is
intent to evade taxes.
(b) Intent to Evade Taxes
Intent to conceal or mislead may be inferred from a course
or pattern of conduct. See Spies v. United States, 317 U.S. 492,
499 (1943); Petzoldt v. Commissioner, 92 T.C. at 699 (1989);
Stone v. Commissioner, 56 T.C. 213, 223-224 (1971); Otsuki v.
Commissioner, 53 T.C. 96, 105-106 (1969). The courts have relied
upon a number of indicia, or badges, of fraud in deciding whether
an underpayment of tax is due to fraud. See, e.g., Bradford v.
Commissioner, 796 F.2d 303, 307-308 (9th Cir. 1986), affg. T.C.
Memo. 1984-601; Clayton v. Commissioner, 102 T.C. 632, 647
(1994); Petzoldt v. Commissioner, supra at 700. Although no
single factor is necessarily sufficient to establish fraud, the
existence of several factors constitutes persuasive
circumstantial evidence of fraud. See, e.g., Petzoldt v.
Commissioner, supra.
Consistent failure to report substantial amounts of income
over a number of years is, standing alone, highly persuasive
evidence of fraudulent intent. See, e.g., Kurnick v.
Commissioner, 232 F.2d 678, 681 (6th Cir. 1956), affg. per curiam
T.C. Memo. 1955-31. Consistent use of cash, and failure to
maintain adequate books and records also constitute badges of
fraud. See, e.g., Bradford v. Commissioner, supra at 307-308.
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