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income, (2) failing to maintain adequate records, (3) failing to
file tax returns, (4) giving implausible or inconsistent
explanations of behavior, (5) concealing assets, (6) failing to
cooperate with tax authorities, (7) engaging in illegal
activities, and (8) failing to make estimated tax payments.
Spies v. United States, supra at 499-500; Conti v. Commissioner,
39 F.3d at 662; Bradford v. Commissioner, supra at 307-308;
Niedringhaus v. Commissioner, 99 T.C. at 211; Runkle v.
Commissioner, T.C. Memo. 2005-112. While no single factor is
essential to establishing fraud, the existence of several “badges
of fraud” may constitute compelling circumstantial evidence of
fraud. See Bradford v. Commissioner, supra.
1. Understating Income
This Court has held that consistent understatements of
income in substantial amounts over a number of years by
knowledgeable taxpayers, standing alone, may be considered
persuasive evidence of fraud. Otsuki v. Commissioner, 53 T.C. at
108. For the 1995 and 1996 taxable years, respondent discovered
that petitioner understated gross receipts deposited in the OFT
and DSG bank accounts, over which petitioner had signatory
authority. After respondent’s discovery, petitioner agreed to
deficiencies for those taxable years. For the years in issue,
petitioner received compensation for his teaching and speaking
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