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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; it
must be established by independent evidence that establishes a
fraudulent intent on the taxpayer's part. See Otsuki v.
Commissioner, 53 T.C. 96, 106 (1969). Because direct proof of a
taxpayer's intent is rarely available, fraud may be proven by
circumstantial evidence, and reasonable inferences may be drawn
from the relevant facts. See Spies v. United States, 317 U.S.
492, 499 (1943); Stephenson v. Commissioner, 79 T.C. 995, 1006
(1982), affd. 748 F.2d 331 (6th Cir. 1984). For example, an
intent to conceal or mislead may be inferred from a pattern of
conduct, see Spies v. United States, supra at 499, or from a
taxpayer's entire course of conduct, see Stone v. Commissioner,
56 T.C. 213, 223-224 (1971). Likewise, a pattern showing a
consistent underreporting of income, when accompanied by
circumstances evidencing an intent to conceal, may justify a
strong inference of fraud. See Parks v. Commissioner, supra at
664.
We often rely on certain indicia of fraud in deciding the
existence of fraud. The presence of several indicia is
persuasive circumstantial evidence of fraud. See Beaver v.
Commissioner, 55 T.C. 85, 93 (1970). The "badges of fraud"
include: (1) The filing of false documents; (2) understatement
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