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income tax due and owing to the United States of
America $57,018.00, whereas the defendant then and
there well knew that his taxable income for the said
calendar year was approximately $354,756.78 upon which
taxable income there was then due and owing to the
United States of America an income tax of approximately
$161,613.89.
In violation of Title 26, United States Code,
Section 7201, and Title 18, United States Code, Section
2. * * *
25. The petitioner on August 22, 1995, entered a
plea of guilty to the charge set forth against him in
said indictment. * * *
26. On September 6, 1995, the United States
District Court entered its judgment pursuant to said
plea. * * *
27. Among the issues of fact determined in the
aforesaid criminal case was whether Richard P. Console,
the defendant therein, and the petitioner herein, did
in fact willfully file a false and fraudulent income
tax return for the taxable year with intent to evade
and defeat income tax, and whether he did in fact by
such means understate a part of the income tax due and
owing by him to United States of America for said year.
28. During the 1992 tax year, petitioner received
$0.00 income on his purported Schedule C business and
listed expenses of $563,871.00 including $554,861.00 in
attorneys’s fees.
29. The $554,861.00 in attorney’s fees was paid
for his criminal defense in the action described in
paragraphs 22 through 26 above and in a prior criminal
matter described in paragraph 13 above.
Discussion
We address first whether petitioner is liable for the
deficiencies and additions to tax under section 6661(a) for
substantial understatement. Respondent’s determination is
presumed correct, and petitioner bears the burden of proving it
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