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related expenses. Siravo v. United States, 377 F.2d 469, 473
(1st Cir. 1967); Franklin v. Commissioner, T.C. Memo. 1993-184.
Petitioner has not produced credible evidence of additional
expenses incurred relating to his purchase and sale of marijuana
in excess of those allowed by respondent. Accordingly,
respondent has established by clear and convincing evidence that
in 1985 and 1986 petitioner herein had significant additional
income and income taxes relating to petitioner’s illegal sale of
marijuana that petitioner did not report on his 1985 and 1986
Federal income tax returns.
Petitioner was indicted and convicted on numerous charges
relating to his purchase and sale of marijuana during 1985, 1986,
and 1987. No income relating to petitioner’s sale of marijuana
was reported on petitioners’ joint Federal income tax return for
the years in issue. Gatling v. Commissioner, 286 F.2d 139, 145
(4th Cir. 1961) (“[P]roof of consistent and substantial
understatements of income over a period of years may constitute
persuasive and convincing evidence of fraud.”), affg. T.C. Memo.
1959-224; see also Patton v. Commissioner, 799 F.2d 166, 171 (5th
Cir. 1986), affg. T.C. Memo. 1985-148; Merritt v. Commissioner,
301 F.2d 484, 487 (5th Cir. 1962), affg. T.C. Memo. 1959-172.
Petitioner dealt in large amounts of cash when buying and
selling marijuana, but petitioner failed to maintain or to
produce books and records relating to the transactions, see
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