Charles McHan and Martha McHan - Page 16

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          respondent’s agent identified a number of specific marijuana                
          sales transactions in which petitioner participated with Posey              
          and Cunningham in 1985, 1986, and 1987.  Based on the information           
          obtained, respondent’s agent determined petitioner’s related                
          gross receipts, cost of goods sold, and gross profits.                      
               Petitioners do not dispute that petitioner participated in             
          marijuana transactions with Posey and Cunningham, and for the               
          most part petitioners do not dispute certain facts relied on by             
          respondent in calculating petitioner’s gross receipts, cost of              
          goods sold, and gross profit therefrom.  To the contrary, at both           
          his criminal trial and his trial herein petitioner generally                
          admitted to his involvement in the marijuana transactions                   
          described by Posey and by Cunningham.3                                      
               Nevertheless, petitioner claims that he did not receive any            
          net income or profit from the marijuana sales.  According to                
          petitioner, he was merely assisting friends in the purchase and             
          sale of marijuana.  Our view of petitioner’s claim, however, is             
          stated in Petzoldt v. Commissioner, supra at 697:                           

               There is nothing in the record which would indicate                    
               that petitioner sold marijuana for philanthropic                       
               reasons, expecting no profit for his efforts.  Common                  
               sense would dictate the conclusion that anyone who is                  
               in an illegal and dangerous business such as the                       
               dealing of drugs would demand a very large profit for                  
               his enormous risks. * * *                                              

               3 The transcripts of petitioner’s July 1992 criminal trial             
          were admitted into evidence herein.                                         





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