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report this income, and the resulting underpayments for 1991 and
1992, were due to the fraud of each petitioner for each year.
For 1993, petitioners had an underpayment of tax required to
be shown on their tax return, and some part of this underpayment
was due to petitioners’ negligence.
OPINION
I. General Summary
The CIPAA Casino paid $10 or $12 per hour worked to each
petitioner in 1991, 1992, and 1993. As to this hourly
compensation, the CIPAA Casino did not send Forms W-2 to
petitioners for 1991 and 1992, but did for 1993. Petitioners did
not report any of this income on their 1991 (almost $10,000) and
1992 (about $15,000) tax returns; they reported the full W-2
amounts on their 1993 tax return.
The CIPAA Casino gathered, apportioned, and periodically
paid to their employees the tips that patrons paid. Petitioners
did not report any of this tip income on their 1991 tax return;
they reported $1,230 of this income (Rogelio--$750, Zenaida--
$480) on their 1992 tax return.
We hold that respondent proved, by clear and convincing
evidence, that (1) petitioners failed to report hourly
compensation that they received in 1991 and 1992, (2) petitioners
failed to report tip income that they received in 1991, (3) these
omissions led to underpayments of tax for 1991 and 1992, and (4)
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