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amounts of income over a period of years is evidence of
fraudulent intent. E.g., Truesdell v. Commissioner, 89 T.C.
1280, 1302 (1987). The income that petitioner failed to report
was generated by an illegal activity, viz, the sale of drugs. We
reasonably assume that persons who are engaged in illegal
activity and who derive income therefrom generally do not report
that income to conceal or mislead for the purpose of avoiding
criminal prosecution with knowledge that taxes are avoided.
Petitioner’s failure to report income from the sale of drugs,
thus, provides a basis for inferring intent to evade tax. See,
e.g., Baker v. Commissioner, T.C. Memo. 1991-340, affd. without
published opinion 9 F.3d 1550 (9th Cir. 1993). Petitioner tried
to conceal the proceeds derived from his criminal activities by
placing assets in the name of his mother. That is evidence of
fraudulent intent. See Spies v. United States, 317 U.S. 492, 499
(1943). We believe that petitioner’s illegal drug activities
were substantially engaged in for pecuniary gain, which gain
would not be decreased if he could evade Federal income tax on
his drug income. Based on the record as a whole, we find that
petitioner underpaid his tax for each of the years in question
with the intent to evade a tax known to be owing. In other
words, petitioner acted fraudulently; he did so for each of the
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