Charles Y. and Jin Y. Choi - Page 22




                                       - 22 -                                         
         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).                                  





Page:  Previous  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  Next

Last modified: May 25, 2011