John Marretta - Page 7

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          1993 return so that he would not have to pay income tax on that             
          amount; (6) the tax loss on the unreported income was                       
          approximately $26,959; (7) at the time he filed his 1994 Federal            
          income tax return, he knew that he had received approximately               
          $127,509 in total monthly profit income on his CNC investments in           
          1994; (8) he failed to report this income on his 1994 return so             
          that he would not have to pay income tax on that amount; (9) the            
          tax loss on the unreported income was approximately $34,761; and            
          (10) in attempting to evade the additional taxes, he acted                  
          willfully; that is, he acted voluntarily with the specific intent           
          to violate a known legal duty.                                              
               According to an affidavit submitted by a special agent with            
          the Criminal Investigation Division of the IRS for the purpose of           
          calculating petitioner’s offense level under the Sentencing                 
          Guidelines, the IRS followed the definition of “‘tax loss’                  
          contained at U.S.S.G. �2T1.1(c)(1)(A).”  The affidavit goes on to           
          say that “That subsection of the Sentencing Guidelines states               
          that the tax loss ‘shall be treated as 28% of the unreported                
          gross income * * * unless a more accurate determination of the              
          tax loss can be made.’”                                                     
                                       OPINION                                        
               Respondent bears the burden of proving fraud by clear and              
          convincing evidence.  Sec. 7454(a); Rule 142(b); Sadler v.                  
          Commissioner, 113 T.C. 99, 102 (1999).  To satisfy this burden,             






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