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such circumstantial evidence as: (1) understatement of income;
(2) inadequate records; (3) failure to file tax returns;
(4) implausible or inconsistent explanations of behavior;
(5) concealing assets; and (6) failure to cooperate with tax
authorities. Spies v. United States, 317 U.S. 492, 499 (1943);
Bradford v. Commissioner, 796 F.2d 303, 307 (9th Cir. 1986),
affg. T.C. Memo. 1984-601.
But we begin with what we think is the most important bit of
evidence in support of the Commissioner’s position: In their
criminal plea agreements, Mr. Chen admitted that he conspired to
commit fraud and Mrs. Chen admitted to “act[ing] with a specific
intent to commit fraud.” They also both pleaded guilty under
section 7206(1) to willfully filing their 1998 income tax return
knowing it was false because it did not include the proceeds of
their fraud. (We specifically note, with regard to Mrs. Chen,
that the plea agreement has a certificate of accurate translation
and that Mrs. Chen did not attack her consent to the plea
agreement.)
It is true that this is not enough for the Commissioner to
win on this issue through collateral estoppel--the fraud penalty
requires proof of an intent to evade taxes, and we held in Wright
v. Commissioner, 84 T.C. 636, 643 (1985), that a conviction under
section 7206(1) establishes as a matter of law only an intent to
falsify a tax return. But a conviction for willful falsification
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