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due to fraud within the meaning of section 6663. See DiLeo v.
Commissioner, supra at 885-886; Amos v. Commissioner, 43 T.C. 50,
54-56 (1964), affd. 360 F.2d 358 (4th Cir. 1965).
Respondent has shown by clear and convincing evidence that
petitioner fraudulently understated income for 1991. The classic
indicia of fraud have been shown in this case. Respondent has
shown: A pattern of fraudulent activity; concealment; and large
consecutive understatements of income. In addition, we have
considered the fact that petitioner pleaded guilty to criminal
tax evasion for 1992, a year in which the pattern of activity and
gravity of the understatement were essentially the same as in
1991.
Respondent also determined that petitioners were liable for
self-employment tax under section 1402 on the earnings from
Gene’s. Earnings from self-employment are income derived by an
individual from any trade or business carried on by the
individual. Petitioners did not brief8 this issue, and there is
nothing in the record showing respondent’s determination to be in
error. Accordingly, petitioners are liable for self-employment
tax on the earnings from Gene’s.
8 With respect to the final two issue discussed in this
opinion, petitioners failed to present argument, reply to
respondent’s argument, or otherwise discuss the issues in their
briefs. Failure to discuss an argument on brief has been held to
constitute an abandonment of the controversy. See Rybak v.
Commissioner, 91 T.C. 524, 566 n.19 (1988).
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