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combined with other badges of fraud. Considine v. United States,
supra; Estate of Rau v. Commissioner, 301 F.2d 51 (9th Cir.
1962), affg. T.C. Memo. 1959-117.
We often rely on certain indicia of fraud in deciding the
existence of fraud. The presence of several indicia is
persuasive circumstantial evidence of fraud. Beaver v.
Commissioner, supra at 93. The badges of fraud include: (1)
Understatement of income, (2) maintenance of inadequate records,
(3) failure to file tax returns, (4) implausible or inconsistent
explanations of behavior, (5) concealment of income or assets,
and (6) failure to cooperate with tax authorities. Spies v.
United States, supra; Estate of Trompeter v. Commissioner, 279
F.3d 767, 773 (9th Cir. 2002), vacating and remanding 111 T.C. 57
(1998); Bradford v. Commissioner, 796 F.2d 303, 307-308 (9th Cir.
1986), affg. T.C. Memo. 1984-601. We discuss each of the badges
as it may relate to our case.
1. Understatement of Income
Understating income is indicative of fraudulent intent.
Bradford v. Commissioner, supra. The existence of an
understatement of income was clearly and convincingly established
by Mr. Ford’s guilty plea, by his testimony in both his criminal
case and in this case, and by our findings concerning
petitioners’ unreported taxable income for 1986. The evidence
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