- 23 - Commissioner, supra at 847; Chase v. Commissioner, T.C. Memo. 2004-142. Courts have found that badges or indicia of fraud provide probative evidence. Badges of fraud include: (1) Consistent and substantial understatement of income; (2) failure to cooperate with authorities; (3) implausible or inconsistent explanations of behavior; (4) failure to maintain adequate books and records; (5) concealment of assets; (6) concealing income and information from a return preparer; and (7) extensive dealings in cash. E.g., Spies v. United States, 317 U.S. 492, 499 (1943); Estate of Mazzoni v. Commissioner, 451 F.2d 197, 202 (3d Cir. 1971), affg. T.C. Memo. 1970-37; DiLeo v. Commissioner, supra at 875; Chase v. Commissioner, supra; Bacon v. Commissioner, T.C. Memo. 2000-257, affd. without published opinion 275 F.3d 33 (3d Cir. 2001). Petitioner understated substantial amounts of his income in each of the years in issue. Petitioner falsely stated to respondent’s agents that he was unaware that checks issued to the corporation had been deposited to his and Ms. McNamara’s personal bank account. Petitioner failed to maintain adequate corporate books and falsified corporate records. Numerous customer checks were not recorded on the corporation’s books and records. Petitioner caused the corporation to issue checks to pay fictitious expenses and recorded these fictitious expenses in the corporation’sPage: Previous 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 Next
Last modified: May 25, 2011