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T.C. 661, 700 (1989). A pattern of consistent underreporting of
income, particularly when accompanied by other circumstances
exhibiting an intent to conceal, justifies the inference of
fraud. Parks v. Commissioner, 94 T.C. 654, 664 (1990).
Respondent argues that the following factors or “badges” of
fraud are present in this case: (1) Admission of fraud by the
taxpayer; (2) concealing income from a taxpayer’s tax return
preparer; and (3) engaging in a pattern of behavior that
indicates an intent to mislead or conceal. See Bradford v.
Commissioner, 796 F.2d 303, 307 (9th Cir. 1986), affg. T.C. Memo.
1984-601; Parks v. Commissioner, supra at 664-665.
As stated above, at petitioner’s plea hearing, petitioner
admitted: (1) At the time he filed his 1992 Federal income tax
return, he knew that he had received approximately $41,600 in
total monthly profit income on his CNC investments in 1992; (2)
he failed to report this income on his 1992 return so that he
would not have to pay income tax on that amount; (3) at the time
he filed his 1993 Federal income tax return, he knew that he had
received approximately $109,663 in total monthly profit income on
his CNC investments in 1993; (4) he failed to report this income
on his 1993 return so that he would not have to pay income tax on
that amount; (5) at the time he filed his 1994 Federal income tax
return, he knew that he had received approximately $127,509 in
total monthly profit income on his CNC investments in 1994; (6)
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