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burden of proving fraud by clear and convincing evidence. Sec.
7454(a); Rule 142(b); Clayton v. Commissioner, supra.
The existence of fraud is a question of fact to be resolved
upon consideration of the entire record. DiLeo v. Commissioner,
96 T.C. 858, 874 (1991), affd. 959 F.2d 16 (2d Cir. 1992); Estate
of Pittard v. Commissioner, 69 T.C. 391 (1977). Fraud is never
presumed and must be established by independent evidence that
establishes fraudulent intent. Edelson v. Commissioner, supra;
Beaver v. Commissioner, 55 T.C. 85, 92 (1970). Fraud may be
proven by circumstantial evidence because direct evidence of the
taxpayer’s fraudulent intent is seldom available. Spies v.
United States, 317 U.S. 492 (1943); Rowlee v. Commissioner, 80
T.C. 1111 (1983); Gajewski v. Commissioner, 67 T.C. 181, 199
(1976), affd. without published opinion 578 F.2d 1383 (8th Cir.
1978). The taxpayer’s entire course of conduct may establish the
requisite fraudulent intent. Niedringhaus v. Commissioner, 99
T.C. 202 (1992); Stone v. Commissioner, 56 T.C. 213, 223-224
(1971); Otsuki v. Commissioner, 53 T.C. 96, 105-106 (1969).
Courts have developed several indicia, or "badges of fraud",
from which the requisite fraudulent intent can be inferred. They
include: (1) Failing to file income tax returns, (2)
understating income, (3) failing to maintain adequate records,
(4) concealing assets, (5) failing to cooperate with tax
authorities, (6) asserting frivolous arguments and objections to
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