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on the Pleadings), Rule 121 (Summary Judgment), or Rule 122
(Submission Without Trial). Gordon v. Commissioner, 73 T.C. 736,
739 (1980).
Petitioner conceded an understatement of tax for each of the
years at issue. Accordingly, we must determine whether any part
of the underpayment was due to fraud with intent to evade income
tax by petitioner. In the case at bar, material allegations in
the answer with respect to fraud have been deemed to be admitted
by our granting of respondent's Rule 37(c) motion. In our view,
those findings of fact clearly and convincingly establish fraud
with intent to evade tax.
For the tax years 1986 and 1987, fraud is conclusively
established by petitioner's prior conviction under section 7201
for those years. Arctic Ice Cream Co. v. Commissioner, 43 T.C.
68 (1964). As to the remaining years--1983, 1984, 1985, and
1988--there are numerous badges of fraud. Petitioner
misrepresented his status as exempt on Form W-4; i.e., he claimed
he owed no taxes for the years at issue, but he had unreported
income in the amount of $243,170. In an attempt to conceal his
income and evade taxes, petitioner withheld information from the
IRS. Moreover, he signed his paychecks over to third parties in
an attempt to conceal transactions from the IRS and evade taxes.
Furthermore, petitioner knew of his tax return filing obligation,
yet he willfully failed to file tax returns for the years at
issue.
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