- 44 -
743 F.2d 309, 312 (5th Cir. 1984), affg. T.C. Memo. 1984-25;
Merritt v. Commissioner, 301 F.2d 484, 487 (5th Cir. 1962), affg.
T.C. Memo. 1959-172; Powell v. Granquist, 252 F.2d 56, 59 (9th
Cir. 1958); Parks v. Commissioner, supra at 664-665. The mere
failure to report income is not sufficient to establish fraud.
Petzoldt v. Commissioner, supra at 700.
Petitioners' Taxable Year 1987
Respondent determined that $334,937 of petitioners' under-
payment for 1987 is attributable to fraud. At the conclusion of
the trial in this case, petitioners conceded the amount of the
underpayment for that year, and they also conceded that they are
estopped from denying fraud for 1987 because of their conviction
for criminal tax evasion under section 7201 for that year. See
Manzoli v. Commissioner, 904 F.2d 101, 105 (1st Cir. 1990), affg.
T.C. Memo. 1988-299, supplemented by T.C. Memo. 1989-94; DiLeo v.
Commissioner, 96 T.C. 858, 885-886 (1991), affd. 959 F.2d 16 (2d
Cir. 1992). Petitioners reiterate those concessions on brief.
Petitioners nonetheless contend, inconsistently in our view,
that "the amount of the deficiency and the resulting civil
penalty may be litigated in subsequent civil proceedings." To
support that contention, petitioners make the following
conclusory argument on brief: "Because of the arbitrary nature
[sic] the Respondent's determination of the portion of the
deficiency attributable to disallowed expenses no fraud penalty
in any of the years in question can be attributable to that
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