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After concessions, we must determine the following issues:
(1) Whether respondent’s bank deposit analyses correctly
determined petitioners’ unreported gross receipts during 1993,
1994, and 1995 in the amounts of $721,408,1 $735,207, and
$542,641, respectively. We hold that they did.
(2) Whether petitioners are liable for penalties on their
1993, 1994, and 1995 tax for fraud pursuant to section 6663(a).
We hold they are. (Accordingly, we do not decide respondent’s
alternative determination that petitioners are liable for
penalties for negligence pursuant to section 6662(a).)2
Unless otherwise indicated, section references are to the
Internal Revenue Code in effect for the years in issue. Rule
references are to the Tax Court Rules of Practice and Procedure.
Dollar amounts are rounded to the nearest dollar.
FINDINGS OF FACT
Some of the facts were stipulated. The stipulation of facts
and the exhibits submitted therewith are incorporated herein by
reference. When the petition was filed, petitioners Chung Ui Kim
1Respondent determined that petitioners had $791,408 of
unreported gross receipts for 1993 but subsequently conceded that
$70,000 was from a nontaxable source.
2Respondent also determined, and we agree, that for the
years in issue, certain computational adjustments should be made,
which would: (1) Reduce petitioners’ itemized deductions, (2)
increase petitioners’ self-employment tax liability, and (3)
reduce petitioners’ claimed exemptions. These are mathematical
adjustments that the parties can make in their Rule 155
computation.
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