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The danger and risks to which petitioner exposed himself could
not be more apparent. Petitioner was arrested, tried, convicted,
and sentenced to a lengthy period of incarceration in a Federal
penitentiary. We reject petitioner’s testimony that he did not
have an ownership interest in the illegal drug transactions
identified and used by respondent in his calculations of
petitioners’ income.
For purposes of the tax deficiencies herein, and based on
petitioners’ burden of proof and with the two exceptions noted
below, we agree with respondent’s calculations of petitioners’
unreported income from marijuana sales, as set forth in the
notices of deficiency for 1985, 1986, and 1987.
The first adjustment to be made to respondent’s calculations
relates to a November 1985 transaction involving purported gross
receipts of $64,000 and, after $29,500 in cost of goods sold, a
purported gross profit of $34,500. Respondent now concedes this
transaction did not occur or should not be charged to petitioner.
The second adjustment to be made to respondent’s
calculations involves the losses of $73,000 and $42,000 that
petitioner realized in 1986 and 1987, respectively, from the
Florida transactions. Respondent’s agent apparently overlooked
or disregarded these loss transactions that are to be taken into
account in the calculations of petitioners’ unreported income for
1986 and 1987.
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