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forward with such offsets. On the issue of the marijuana sales,
the sole information in the record pertaining to costs of goods
sold is the testimony of Hatcher, indicating purchases of the
drugs for $1,000 to $1,100 per pound. Respondent used the higher
value in calculating the claimed underpayments, and petitioner
has offered nothing to suggest any further allowance.
Concerning the payments from M.J. Lord, petitioner contends
that the amounts were solely for materials and that the job was
done “out of kindness, and not for profit.” Elsewhere he claims
that he did not report the payments because the proceeds went to
Raintree Contracting, an entity allegedly owned by Rick Guevarra,
with whom petitioner worked on the M.J. Lord project. Once
again, however, these statements are nothing more than unsworn
and uncorroborated assertions, not evidence showing costs or
expenses.
Hence, as to both the marijuana sales and the construction
payments, respondent has carried the burden of establishing
underpayments by clear and convincing evidence.
B. Fraudulent Intent
The second prong of the fraud test requires respondent to
show that a portion of the underpayment is attributable to fraud.
Fraud for this purpose is defined as intentional wrongdoing on
the part of the taxpayer, with the specific purpose of avoiding a
tax believed to be owed. Stoltzfus v. United States, 398 F.2d
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