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State of California. Most importantly, petitioner is deemed to
have admitted that he fraudulently and with the intent to evade
taxes filed income tax returns for 1992 and 1993 in which he
omitted $751,823 and $400,260 in income from sales of illegal
drugs, respectively, and that the underpayments of tax required
to be shown on his income tax returns for 1992 and 1993 are due
to fraud with intent to evade income tax.
We hold that the facts deemed admitted pursuant to Rule
37(c) satisfy respondent's burden of proving fraud. Doncaster v.
Commissioner, 77 T.C. at 337. Those facts constitute clear and
convincing evidence that petitioner, fraudulently and with the
intent to evade taxes known to be owing, failed to report the
income that he derived from sales of illegal drugs during 1992
and 1993 and that the underpayment of taxes required to be shown
on each of petitioner's 1992 and 1993 income tax returns is due
to fraud. Consequently, respondent is entitled to summary
judgment that petitioner is liable for the penalty for fraud
under section 6663(a) for the taxable years 1992 and 1993.
In order to reflect our conclusions herein,
An order and decision granting
respondent's motion for summary judgment
will be entered.
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