William R.Tinnerman - Page 13

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          (1943); Korecky v. Commissioner, supra at 1568; Rowlee v.                   
          Commissioner, supra at 1123.  Although fraud may not be found               
          under "circumstances which at the most create only suspicion",              
          Petzoldt v. Commissioner, supra at 700, the intent to defraud may           
          be inferred from any conduct the likely effect of which would be            
          to conceal, mislead, or otherwise prevent the collection of taxes           
          believed to be owing, Spies v. United States, supra at 499.                 
               Courts have relied on a number of indicia or badges of fraud           
          in deciding whether to sustain the Commissioner’s determinations            
          with respect to the additions to tax for fraud.  Although no                
          single factor may be necessarily sufficient to establish fraud,             
          the existence of several indicia may be persuasive circumstantial           
          evidence of fraud.  Solomon v. Commissioner, 732 F.2d 1459, 1461            
          (6th Cir. 1984), affg. per curiam T.C. Memo. 1982-603; Beaver v.            
          Commissioner, supra at 93.                                                  
               Circumstantial evidence that may give rise to a finding of             
          fraudulent intent includes:  Understatement of income; inadequate           
          records; failure to file tax returns; concealment of assets;                
          failure to cooperate with tax authorities; filing false Forms W-            
          4; failure to make estimated tax payments; and engaging in                  
          illegal activity.  Bradford v. Commissioner, 796 F.2d 303, 307              
          (9th Cir. 1986), affg. T.C. Memo. 1984-601.  The "badges of                 
          fraud" are nonexclusive.  Miller v. Commissioner, supra at 334.             







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