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existence of an underpayment and that the taxpayer intended to
evade taxes known to be owing by conduct intended to conceal,
mislead, or otherwise prevent the collection of taxes. Parks v.
Commissioner, 94 T.C. at 660-661. In this case, respondent has
shown the existence of underpayments for 1991 and 1992.
The existence of fraud is a question of fact to be resolved
upon consideration of the entire record. DiLeo v. Commissioner,
96 T.C. at 874. Fraud is never presumed and must be established
by independent evidence of fraudulent intent. Edelson v.
Commissioner, supra. Fraud may be shown by circumstantial
evidence because direct evidence of the taxpayer’s fraudulent
intent is seldom available. Gajewski v. Commissioner, 67 T.C.
181, 199 (1976), affd. without published opinion 578 F.2d 1383
(8th Cir. 1978). The taxpayer’s entire course of conduct may
establish the requisite fraudulent intent. Stone v.
Commissioner, 56 T.C. 213, 224 (1971).
To decide whether the fraud penalty is applicable, courts
have considered various indicia or “badges of fraud”, which
include: (1) Understatement of income; (2) inadequate books and
records; (3) failure to file tax returns; (4) implausible or
inconsistent explanations of behavior; (5) concealment of assets;
(6) failure to cooperate with tax authorities; (7) engaging in
illegal activities; (9) lack of credibility of the taxpayer’s
testimony; and (10) dealing in cash. Bradford v. Commissioner,
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