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and various assets used in the drug trafficking operation were
held by corporations in order to conceal ownership.
Extensive dealing in large amounts of cash also constitutes
evidence of fraud. Estate of Mazzoni v. Commissioner, supra.
Various assets used in the drug trafficking operation were paid
for in full, and petitioner's $250,000 home was paid for in cash.
On occasion, petitioner would also "pay-out" other members of the
smuggling operation in cash.
After scrutinizing the above-mentioned factors, in
combination with the testimony of Sydoriak, we conclude that the
record contains clear and convincing evidence of petitioner's
intent to conceal, mislead, or otherwise prevent the collection
of taxes on the unreported income for the years in issue. We
hold that the understatements of tax attributable to the
unreported income were due to fraud. Accordingly, we sustain
respondent's determination that petitioner is liable for
additions to tax for fraud.
Issue 3. Addition to Tax for Substantial Understatement
Respondent determined that petitioner is liable for
additions to tax for substantial understatement under section
6661 for the years in issue. Petitioner asserts that she is
entitled to innocent spouse status and therefore not liable for
the addition to tax for substantial understatement. We have
found that petitioner is not entitled to innocent spouse status.
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