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Truesdell v. Commissioner, 89 T.C. 1280, 1302 (1987); Gajewski v.
Commissioner, 62 T.C. at 200, and petitioner failed to inform his
tax return preparer of his marijuana sales, see Estate of Mazzoni
v. Commissioner, 451 F.2d 197, 202 (3d Cir. 1971), affg. T.C.
Memo. 1970-37.
Taken as a whole, the evidence establishes that petitioner
acted with the requisite fraudulent intent and that petitioner
underreported substantial income for 1985 and 1986 relating to
marijuana sales with fraudulent intent. We also note that
Special Trial Judge Carluzzo observed petitioner’s testimony and
rejected, in his recommended findings of fact and conclusions of
law, petitioner’s testimony as to his limited participation in
the marijuana sales transactions and concluded that petitioner
had the requisite fraudulent intent in filing his 1985 and 1986
Federal income tax returns without reporting thereon his
marijuana sales transactions.
We sustain respondent’s determinations that petitioner is
liable for the additions to tax for fraud prescribed under
section 6653(b) for 1985 and 1986.
Respondent also determined additions to tax under section
6661 for 1985 and 1986. For tax returns due after December 31,
1982 (but before January 1, 1990), section 6661 provides for an
addition to tax equal to 25 percent of the amount of any tax
underpayment attributable to a substantial understatement. An
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