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independent evidence of fraudulent intent. Beaver v.
Commissioner, 55 T.C. 85, 92 (1970). Fraud may be shown by
circumstantial evidence because direct evidence of the taxpayer’s
fraudulent intent is seldom available. Gajewski v. Commissioner,
67 T.C. 181, 200 (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. Stone v.
Commissioner, 56 T.C. 213, 223-224 (1971).
Courts have relied upon a number of indicia or badges of
fraud in deciding whether an underpayment of tax is due to fraud.
See, e.g., Bradford v. Commissioner, 796 F.2d 303, 307-308 (9th
Cir. 1986), affg. T.C. Memo. 1984-601; Clayton v. Commissioner,
102 T.C. 632, 647 (1994); Petzoldt v. Commissioner, 92 T.C. 661,
700 (1989). Although no single badge is necessarily sufficient
to establish fraud, the existence of several badges of fraud
constitutes persuasive circumstantial evidence of fraud.
Petzoldt v. Commissioner, supra at 700.
Respondent contends that the following badges of fraud are
present in this case: (1) Inadequate records, (2) providing
implausible or inconsistent explanations of behavior, (3) pattern
of behavior indicating an intent to mislead, and (4) filing false
documents. We agree with respondent.
The record clearly and convincingly establishes that
petitioner maintained inadequate records with respect to the
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