Dennis E. Runkle and Debra A. Runkle - Page 19

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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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