Charles Y. and Jin Y. Choi - Page 20




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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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