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authorities; (7) the filing of false documents; (8) making of
false and inconsistent statements to revenue agents; (9)
concealing income from a taxpayer’s tax preparer; and (10)
extensive dealings in cash. Bradford v. Commissioner, 796 F.2d
303, 307 (9th Cir. 1986), affg. T.C. Memo. 1984-601; Parks v.
Commissioner, 94 T.C. 654, 664 (1990); Temple v. Commissioner,
supra. No single factor is necessarily dispositive; however, a
combination of several factors is persuasive circumstantial
evidence of fraud. Petzoldt v. Commissioner, 92 T.C. at 699. “A
pattern of consistent underreporting of income, particularly when
accompanied by other circumstances exhibiting an intent to
conceal, justifies an inference of fraud.” Posnanski v.
Commissioner, T.C. Memo. 2001-26; see Holland v. Commissioner,
348 U.S. 121, 137 (1954).
In this case, the record discloses multiple “badges of
fraud” which clearly and convincingly justify the imposition of
fraud penalties. In 1996 and 1997, there was a significant
understatement of income. We find Mr. Sowards’s testimony that
the funds transferred by STL were loans was false. Except for
Mr. Sowards’s self-serving testimony and an alleged loan
document, all the evidence refutes the existence of a debtor-
creditor relationship. The pattern of STL’s periodic payments
(weekly), the amounts of the payments, the frequent statements
Mr. Sowards provided to STL for “amounts due,” and the fact that
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