- 11 - Traditionally, certain “badges” of fraud have been considered in deciding whether the penalty applies: (1) Understatement of income, (2) lack of adequate records, (3) failure to cooperate with tax authorities, (4) concealment of assets, (5) engagement in illegal activities, (6) dealing in large amounts of cash, (7) making of implausible and inconsistent statements, and (8) the willingness to defraud another in a business transaction. Bradford v. Commissioner, supra at 307- 308; Recklitis v. Commissioner, 91 T.C. 874, 910 (1988). Although no single factor is necessarily sufficient to establish fraud, the existence of several indicia may provide persuasive circumstantial evidence of fraud. Miller v. Commissioner, 94 T.C. 316, 334 (1990). Respondent contends that, with respect to the original 1990 income tax return, petitioner fraudulently omitted taxi leasing and Medicaid income. At the time his original 1990 return was filed, petitioner was receiving income from his taxi-leasing business and from the county government in connection with Medicaid transportation services. Petitioner, in an attempt to conceal that income, did not report that he was involved in a taxi business or that he was being paid by the county in connection with Medicaid services. Respondent, by means of a bank deposit analysis for 1990, has shown that petitioner’s unexplained deposits far exceeded the amount of gross income reported. In addition, after petitioner’sPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011