                       T.C. Memo. 2001-222



                     UNITED STATES TAX COURT



                  JOHN S. FAGAN, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 820-98.               Filed August 14, 2001.



     Dan S. Maccabee, for petitioner.

     David R. Jojola and Angelique Neal, for respondent.



                          MEMORANDUM OPINION

     PAJAK, Special Trial Judge: This matter is before the Court

on respondent’s motion for partial summary judgment.

     For the year 1987, respondent determined a deficiency in

petitioner's Federal income tax in the amount of $370,360 and

additions to tax under section 6653(b)(1)(A) in the amount of

$277,770, under section 6653(b)(1)(B) in an amount to be
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determined of 50 percent of the interest due on $370,360, and

under section 6654 in the amount of $19,881.   The deficiency was

based on respondent’s determination that petitioner had not

reported $970,000 of income from the distribution of marijuana.

Unless otherwise indicated, section references are to the

Internal Revenue Code in effect for the year in issue, and all

Rule references are to the Tax Court Rules of Practice and

Procedure.

     Respondent’s motion for partial summary judgment is limited

to the issue of whether petitioner is collaterally estopped from

disputing that there is an underpayment of his tax for 1987 and

that some part of the underpayment is due to fraud within the

meaning of section 6653(b).

     On September 29, 1993, the U.S. Attorney filed with the U.S.

District Court for the District of Nevada in United States v.

John Steven Fagan, Criminal No. N-92-61-HDM, a three count

Information: Count One--Conspiracy to import in excess of 1,000

kilograms of marijuana/asset forfeiture; Count Two--Unreported

exportation of currency in excess of $10,000; and Count Three--

Felony tax evasion.   The Information further described Count

Three as Section 7201--Income tax evasion.   In Count Three, the

Information set forth the accusation that John Steven Fagan

(Fagan) (petitioner in this case) had received taxable income of
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$970,000 from marijuana trafficking activities and that he “did

willfully attempt to evade and defeat the said income tax due” on

that amount in violation of section 7201.

     On November 28, 1997, the District Court entered a judgment

in the criminal case against Fagan finding him guilty, inter

alia, of the offense of Income Tax Evasion under section 7201 for

the year 1987.   Fagan had pleaded guilty to Counts One, Two, and

Three of the Information, described above.    Fagan was represented

by his then attorney, Christopher H. Wing.

     Section 6653(b)(1)(A) provides an addition to tax if any

part of the underpayment was due to fraud, in the amount of 75

percent of the portion of the underpayment attributable to fraud.

Section 6653(b)(1)(B) provides an addition to tax equal to 50

percent of the interest due with respect to the portion of the

underpayment that is attributable to fraud.   To establish fraud

under section 6653(b) respondent must prove by clear and

convincing evidence: (1) That there was an underpayment of tax

for each year; and (2) that a portion of the underpayment for

each year was due to fraud.   Sec. 7454(a); Rule 142(b).

     To establish that there was an underpayment and that a

portion of the underpayment for each year was due to fraud,

respondent relies on petitioner’s criminal conviction under

section 7201.    Respondent argues that petitioner’s conviction for
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willfully attempting to evade and defeat income tax for 1987 is

binding on petitioner and that under the doctrine of collateral

estoppel petitioner is estopped from denying that for the year

1987 there was an underpayment of his taxes due to fraud.     We

agree.

     This Court addressed the effect of convictions under section

7201 on determinations made under section 6653(b) in Amos v.

Commissioner, 43 T.C. 50, 55-56 (1964), affd. 360 F.2d 358 (4th

Cir. 1965).   In Amos v. Commissioner, supra, this Court concluded

that the fraudulent intent required under section 6653(b) is

included within the fraudulent intent element of a conviction

under section 7201.   A finding in a criminal proceeding that a

taxpayer willfully attempted to evade income tax under section

7201 therefore is binding on that taxpayer under the doctrine of

collateral estoppel in a subsequent civil proceeding involving a

tax deficiency for the same year.      Tomlinson v. Lefkowitz, 334

F.2d 262 (5th Cir. 1964); Brooks v. Commissioner, 82 T.C. 413,

431 (1984), affd. without published opinion 772 F.2d 910 (9th

Cir. 1985); Amos v. Commissioner, supra at 55-56; Deletis v.

Commissioner, T.C. Memo. 1995-512; Knoff v. Commissioner, T.C.

Memo. 1992-624; Savage v. Commissioner, T.C. Memo. 1992-129.

     Petitioner seeks to avoid the foregoing result by referring

to his statement and a Clarification of a Plea Agreement.
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Petitioner’s self-serving statement in a 1995 hearing in a

criminal matter relating to another individual to the effect that

petitioner thought he would not have to pay taxes on his

marijuana dealings is simply not relevant to the issue before the

Court.

     On September 28, 1993, petitioner entered into a Plea

Agreement.    On the same day, petitioner entered into a

Clarification of Plea Agreement (1993 Clarification), signed by

petitioner, by his counsel, and by an Assistant U.S. Attorney.

The 1993 Clarification states, in one of its two separate

paragraphs:    “At this time, the United States and defendant JOHN

STEVEN FAGAN have been unable to resolve the tax issues

associated with this matter.    Therefore, the parties are in

agreement that there will not be a resolution of any remaining

tax issues, either during, or by virtue of, the sentencing in

this matter.”    (Emphasis supplied.)   Petitioner now claims that

under this language of the 1993 Clarification petitioner is not

collaterally estopped from contesting the fraud addition to tax.

     The 1993 Clarification was filed in petitioner’s criminal

case on November 26, 1997.    This Clarification did not affect the

actions taken on November 28, 1997.     What is significant here is

that on November 28, 1997, the District Court entered judgment

against petitioner under section 7201 for income tax evasion.
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Once accepted by the District Court, petitioner’s voluntary plea

of guilt for violation of section 7201, with its intrinsic

admission of each element of the crime, triggered the related

consequences attending such plea, including collateral estoppel

as to fraud under section 6653(b).    Blohm v. Commissioner, 994

F.2d 1542, 1554 (11th Cir. 1993), affg. T.C. Memo. 1991-636.

Nothing petitioner has raised changes the conclusive facts that

he pleaded guilty and was found criminally guilty of violating

section 7201 by engaging in income tax evasion.

     Based on the cited authorities, petitioner is collaterally

estopped from denying that some part of the underpayment in his

tax was due to fraud within the meaning of section 6653(b).



                                           An appropriate order will

                                      be issued.
