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by a preponderance of the evidence that an omitted amount
exceeding 25 percent of the gross income reported was properly
includable in gross income. Sec. 6501(e)(1)(A); Burbage v.
Commissioner, 82 T.C. 546, 553 (1984), affd. 774 F.2d 644 (4th
Cir. 1985); Philipp Bros. Chems., Inc. v. Commissioner, 52 T.C.
240, 254-255 (1969), affd. 435 F.2d 53 (2d Cir. 1970).
Petitioner reported gross income in the amount of $162,553 in his
1985 return; 25 percent of this amount is $40,638.25. As stated
above at paragraph A-4, petitioner is collaterally estopped from
denying that he received some amount of unreported income in
1985. Petitioner nominally borrowed funds for commercial
purposes, yet he deposited $1,372,360 of the proceeds into his
personal accounts. He did not need that portion of the proceeds
to buy the property for which the loans nominally were made. He
exaggerated the value of the collateral provided for the loans.
These violations of the usual obligations of a borrower are
sufficient to show by a preponderance of the evidence that he did
not intend to fully repay the loans. Given the massive amount of
the deposits ($1,372,360), we infer that petitioner received
income of more than $40,638.25 from his deposits of loan proceeds
into his personal accounts in 1985. Petitioner introduced no
evidence to the contrary. Thus, we conclude that petitioner
omitted more than 25 percent of his gross income, and respondent
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