William J. Tully - Page 8




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          T.C. 661, 698 (1989).  Whether fraud exists is a question of fact           
          to be resolved upon review of the entire record.  See Gajewski v.           
          Commissioner, 67 T.C. 181, 199 (1976), affd. without published              
          opinion 578 F.2d 1383 (8th Cir. 1978).  "Fraud is never                     
          presumed."  Beaver v. Commissioner, 55 T.C. 85, 92 (1970).                  
               "Facts deemed admitted pursuant to Rule 37(c) are considered           
          conclusively established and may be relied upon by the government           
          even in relation to issues where the government bears the burden            
          of proof."  Baptiste v. Commissioner, 29 F.3d 1533, 1537 (11th              
          Cir. 1994), affg. T.C. Memo. 1992-198; see also Doncaster v.                
          Commissioner, supra at 336-338 (holding that deemed admissions              
          under Rule 37(c) are sufficient to satisfy the Government's                 
          burden of proof with respect to the issue of fraud).                        
               Based on the facts asserted in respondent's answer, which              
          facts are deemed admitted, there is no genuine issue of material            
          fact with respect to respondent's determinations.  Petitioner is            
          deemed to have fraudulently understated by $187,745 his Schedule            
          C gross receipts for the year in issue.  Petitioner knowingly               
          prepared a false 1993 tax return with the intent to evade tax               
          when he:  (1) Overstated his exemptions, (2) overstated his                 
          standard deduction for married persons, (3) underreported his               
          self-employment taxes, and (4) understated his income tax                   
          liability.  Petitioner's fraudulent actions, as set forth above,            
          are part of a 2-year pattern of fraud in which petitioner engaged           






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