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We next consider petitioner’s level of cooperation with
respondent. Failure to cooperate with the Internal Revenue
Service (IRS) is an indicium of fraud. Douge v. Commissioner,
supra; Bradford v. Commissioner, supra at 307; Recklitis v.
Commissioner, supra. Petitioner did not cooperate with
respondent’s investigation during 1995. The Masons responded to
respondent’s inquiries with tax protester rhetoric and submitted
numerous letters to respondent that advanced tax protester
arguments. Although tax protester arguments may not be evidence
of fraud in and of themselves, they may be indicative of fraud if
made in conjunction with affirmative acts designed to evade
paying Federal income tax. See Kotmair v. Commissioner, 86 T.C.
1253 (1986); Fleischner v. Commissioner, T.C. Memo. 1995-389.
Here, petitioner took or made affirmative acts designed to evade
his tax liability. They include failure to file an income tax
return, failure to make estimated tax payments for the year at
issue, concealment of assets, and understatement of substantial
income. Accordingly, we find that petitioner’s affirmative acts
are evidence of fraud.
Petitioner claims that the transfer of his personal
residence and his various business interests to different trusts
over which he retained complete control is not evidence of fraud.
Petitioner’s explanation that the transfers were made as part of
his estate plan does not withstand scrutiny, however.
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