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imposition of the civil fraud penalty is appropriate upon a
showing that the taxpayer intended to evade taxes believed to be
owing by conduct designed to conceal, mislead, or otherwise
prevent the collection of taxes. DiLeo v. Commissioner, supra at
874.
The existence of fraud is a question of fact to be resolved
upon consideration of the entire record. Id.; Gajewski v.
Commissioner, 67 T.C. 181, 199 (1976), affd. without published
opinion 578 F.2d 1383 (8th Cir. 1978). Fraud will never be
presumed. Recklitis v. Commissioner, 91 T.C. 874, 909-910
(1988); Beaver v. Commissioner, 55 T.C. 85, 92 (1970). However,
because direct proof of a taxpayer’s intent is seldom available,
fraud may be established by circumstantial evidence. Spies v.
United States, 317 U.S. 492, 499-500 (1943); DiLeo v.
Commissioner, supra at 874. In this connection, courts have
developed a nonexclusive list of circumstantial indicia, or
“badges”, of fraud that may support a finding of fraudulent
intent.
Among the badges of fraud that can be distilled from caselaw
are the following: (1) Understatement of income; (2) maintenance
of inadequate records; (3) failure to file tax returns; (4)
implausible or inconsistent explanations of behavior; (5)
concealment of income or assets; (6) failure to cooperate with
tax authorities; (7) engaging in illegal activities; (8) dealing
in cash; (9) failure to make estimated tax payments; and (10)
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