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fraudulent Medicaid activity was uncovered and he pleaded guilty
to criminal charges, petitioner filed amended returns for 1989
and 1990 reflecting substantial income from the taxi business.
Petitioner also claimed substantial expenses on the amended
returns which, if correct, would have resulted in relatively
small taxable income. For 1990, however, petitioner has been
able to substantiate only $127,879 of $211,875 in deductions
claimed on the amended 1990 return.
In addition to failing to report the income-producing
activities and gross income to respondent, petitioner was also
defrauding the county by claiming reimbursement for Medicaid
transportation services that were either not performed, to
unapproved locations, and/or for longer distances than traveled.
Although the 1989 year is no longer in dispute, petitioner
also failed to report the fact that he operated a taxi-leasing
business and/or gross income from that business on his 1989
Federal income tax return. This also shows that petitioner’s
intentional omissions were part of a pattern of activity to
deceive.
Accordingly, we hold that respondent has shown, by clear and
convincing evidence, that petitioner fraudulently omitted income
on his original 1990 tax return.3
3 Petitioner’s 1990 underpayment, for purposes of sec. 6663,
is equal to the unreported income from the taxi leasing,
administrative Medicaid payment, less the amount of business
deductions allowed, including any deductions allowed after the
issuance of the notice of deficiency. The parties will be
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