Bonner
Bonner v. United States
Opinion
Lead Opinion
MEMORANDUM *
Debtor Donald J. Bonner appeals from a decision of the Ninth Circuit Bankruptcy Appellate Panel (“BAP”) affirming the bankruptcy court’s determination that under 11 U.S.C. § 523 (a)(1)(C), his tax liability was not discharged in his Chapter 7 bankruptcy, because he made a fraudulent return with respect to the tax and willfully attempted to evade or defeat the tax. We affirm.
Bonner argues that the IRS failed to sustain its burden of proving fraudulent intent. Fraudulent intent may be inferred from circumstantial evidence, or “badges of fraud.” Bradford v. Comm’r 796 F.2d 303, 307 (9th Cir.1986). These badges of fraud include: (1) understatement of income; (2) inadequate records; (3) failure to file tax returns; (4) implausible or inconsistent explanations of behavior; (5) concealing assets; and (6) failure to cooperate with tax authorities. Id. The record is sufficient to find at least two badges of fraud. First, Bonner does not dispute that he understated his income. Second, he failed to provide the IRS with complete records to support his tax computation, evidencing either failure to maintain adequate records or failure to cooperate with the IRS.