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               Courts have relied on certain indicia (badges) of fraud in             
          deciding whether a taxpayer had the requisite fraudulent intent.            
          These badges include:  (1) Understating income, (2) maintaining             
          inadequate records, (3) failing to file tax returns, (4) giving             
          implausible or inconsistent explanations of behavior,                       
          (5) concealing assets, (6) failing to cooperate with tax                    
          authorities, (7) engaging in illegal activities, (8) attempting             
          to conceal illegal activities, and (9) dealing in cash.                     
          Recklitis v. Commissioner, 91 T.C. 874, 910 (1988); see also                
          Bradford v. Commissioner, 796 F.2d 303, 307-308 (9th Cir. 1986),            
          affg. T.C. Memo. 1984-601.  These badges are nonexclusive.                  
          Niedringhaus v. Commissioner, 99 T.C. 202, 211 (1992).  The                 
          taxpayer’s education and business background are also relevant to           
          the determination of fraud.  Id.  Bearing these general                     
          principles in mind, we turn to the indicia of fraud that are                
          relevant to the instant case.  The presence of several badges is            
          persuasive circumstantial evidence of fraud.  Beaver v.                     
          Commissioner, supra at 93.                                                  
               1.   Understating Income                                               
               Understating income is indicative of fraudulent intent.                
          Bradford v. Commissioner, supra.                                            
               Petitioner understated the 1996 gross income.  The existence           
          of that understatement was clearly and convincingly established             
          by respondent at trial, where respondent showed that BBL’s income           
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