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Commissioner, 91 T.C. 874, 909 (1988). Fraud is never presumed
and must be established by independent evidence of fraudulent
intent. Petzholdt v. Commissioner, supra at 699; Recklitis v.
Commissioner, supra at 909-910. The taxpayer’s entire course of
conduct can be indicative of fraud. Stone v. Commissioner, 56
T.C. 213, 224 (1971).
As direct proof of a taxpayer’s intent is seldom available,
fraud may be established by circumstantial evidence and
reasonable inferences drawn from the record. Stoltzfus v. United
States, supra at 1005; DiLeo v. Commissioner, supra at 874.
Courts have developed a nonexclusive list of factors, or “badges”
of fraud, that support a finding of fraudulent intent. See Spies
v. United States, 317 U.S. 492, 499 (1943); Bradford v.
Commissioner, 796 F.2d 303, 307-308 (9th Cir. 1986), affg. T.C.
Memo. 1984-601. 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. T.C.
Memo. 1982-603.
The “badges” of fraud include: (1) Understating income;
(2) maintaining inadequate records; (3) failing to file tax
returns; (4) providing implausible or inconsistent explanations
of behavior; (5) concealing income or assets; (6) failing to
cooperate with tax authorities; (7) engaging in illegal
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