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not in business and never had a business of his own or any
interest in a business. Petitioner also stated that he had never
prepared Federal income tax returns for others, or counseled or
advised anyone in the preparation of returns. The facts
established by the deemed admissions demonstrate that these
statements were untrue. Such failure to cooperate with tax
authorities is further evidence of fraud. Bradford v.
Commissioner, 796 F.2d 303, 307-308 (9th Cir. 1986), affg. T.C.
Memo. 1984-601.
We conclude that the record contains clear and convincing
evidence of petitioner's fraudulent attempt to evade income taxes
for each of the years in issue. Accordingly, we sustain the
additions to tax for fraud.
Addition to Tax for Substantial Understatement of Income Tax in
1984
Respondent determined that petitioner is liable for an
addition to tax for substantial understatement of income tax
under section 6661(a) for 1984. Section 6661(a) provides for an
addition to tax equal to 25 percent of the amount of the
underpayment attributable to a substantial understatement of
income tax. Pallottini v. Commissioner, 90 T.C. 498, 503 (1988).
An understatement is substantial if it exceeds the greater of
$5,000 or 10 percent of the tax required to be shown on the
return. Sec. 6661(b)(1)(A). This amount may be reduced,
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