-4-
(i) The petitioner and her husband purchased a GMC
Jimmy, a new travel trailer, a lot, another
computer, a time share condominium at Atlantic
Beach, and two lawn tractors during the taxable
year 1989. Petitioner also vacationed in
California, built a two-story garage, and made a
deposit on a swimming pool.
(j) The petitioner did not report the income that she
received from the misappropriation of funds of her
employer on her 1988 and 1989 income tax returns,
in the respective amounts of $152,513 and
$186,094, and the petitioner is liable for the
deficiencies resulting therefrom.
(k) Petitioner fraudulently and with intent to evade
taxes filed false income tax returns for the
taxable years 1988 and 1989 that intentionally
omitted the misappropriated income.
(l) All of the underpayments (deficiencies) in income
tax for the taxable years 1988 and 1989 are due to
fraud with intent to evade taxes.
7. FURTHER ANSWERING the petition with respect to
respondent's determination that the underpayment of tax
for the 1989 taxable year is due to fraud, respondent
affirmatively relies upon the doctrine of collateral
estoppel, and alleges:
(a) Petitioner is the same person who was the
defendant in a criminal case of United States v.
Carolyn M. Lee, Case No. 4:92CR00045-2, in the
United States District Court for the Eastern
District of North Carolina.
(b) Respondent is a party in privity with the United
States of America, the prosecuting party in the
aforesaid criminal case in which petitioner was a
defendant.
(c) On or about July 6, 1992, petitioner plead [sic]
guilty to one count of willfully making and
subscribing a false Federal income tax return for
the 1989 taxable year in violation of the
provisions of I.R.C. � 7206(1), which petitioner
signed under penalties of perjury knowing that the
return was not true and correct as to every
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