- 19 - return filed for each of those years. In addition to the amended returns, an underpayment of tax for each year is further demonstrated by respondent’s net worth analysis, the validity of which is supported by evidence in the record that establishes both the existence of a likely source of unreported income (i.e., Grand Video), and the implausibility of petitioner’s claim to the existence of a cash hoard not taken into account in the net worth analysis. See Parks v. Commissioner, supra at 661. Respondent has met his burden of establishing an underpayment of tax for each year in issue by clear and convincing evidence. Respondent must also establish that a portion of the underpayment of tax for each year is due to fraud. Fraud will be found if, at the time petitioner filed his return for each year in issue, he “intended to evade taxes known to be owing by conduct intended to conceal, mislead, or otherwise prevent the collection of such taxes.” Rowlee v. Commissioner, 80 T.C. 1111, 1123 (1983). Because fraudulent intent is seldom established by direct evidence, it may be reasonably inferred from circumstantial evidence, including evidence of a taxpayer’s course of conduct. See United States v. Walton, 909 F.2d 915, 926 (6th Cir. 1990); Rowlee v. Commissioner, supra; Stone v. Commissioner, 56 T.C. 213, 224 (1971). Conduct that may indicate fraudulent intent, commonly referred to as “badges of fraud”, includes, but is notPage: Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Next
Last modified: May 25, 2011