                         T.C. Memo. 1996-367



                       UNITED STATES TAX COURT



     FERDINAND DECAPRIO AND CLAIRE DECAPRIO, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 7796-94.                       Filed August 12, 1996.



     Ferdinand DeCaprio, pro se.


     Kevin M. Flynn, for petitioner Claire DeCaprio.


     Tracy A. Murphy, for respondent.



                         MEMORANDUM OPINION

     CHIECHI, Judge:    This case is before the Court on respon-

dent's motion under Rule 123(a)1 that petitioner Ferdinand



1
   All Rule references are to the Tax Court Rules of Practice and
Procedure. All section references are to the Internal Revenue
Code in effect for the years at issue.
                                          - 2 -

 DeCaprio be held in default (respondent's motion).

         Respondent determined the following deficiencies in, and

 additions to, petitioner Ferdinand DeCaprio's Federal income

 tax:2

                                             Additions to Tax
                       Section         Section        Section       Section      Section
Year    Deficiency    6653(b)(1)    6653(b)(1)(A) 6653(b)(1)(B)    6653(b)(2)      6661
1983     $22,380       $11,190           --             --             *         $5,595
1984       7,474         3,737           --             --             *          1,869
1985       9,587         4,794           --             --             *          2,397
1986      18,446          --          $13,835           *             --          4,612


* 50 percent of the interest due on the portion of the underpayment attributable
to fraud. Respondent determined that the entire underpayment for each of the
years at issue was due to fraud.

         In respondent's motion, respondent asks us to take account

 of certain concessions by respondent and to find the following

 deficiencies in, and additions to, petitioner's Federal income

 tax:

                                              Additions to Tax
                        Section         Section        Section       Section      Section
 Year    Deficiency    6653(b)(1)    6653(b)(1)(A) 6653(b)(1)(B)    6653(b)(2)      6661

 1983     $17,045       $8,523            --            --              *         $4,261
 1984       4,553        2,277            --            --              *           -0-
 1985       6,452        3,226            --            --              *          1,613
 1986       -0-           --             -0-           -0-             --           -0-



 2
    In the notice of deficiency (notice) issued to both Ferdinand
 DeCaprio and Claire DeCaprio, respondent determined the same
 deficiencies in, but not the same additions to, Claire DeCaprio's
 Federal income tax. That is to say, while respondent determined
 deficiencies in petitioner Claire DeCaprio's Federal income tax
 for 1983 through 1986 in the amounts of $22,380, $7,474, $9,587,
 and $18,446, respectively, she determined additions to petitioner
 Claire DeCaprio's Federal income tax only under sec. 6661 for
 each of those years in the amounts of $5,595, $1,869, $2,397, and
 $4,612, respectively. Petitioner Claire DeCaprio and respondent
 entered into, and filed with the Court, a stipulation of settled
 issues disposing of all issues as to petitioner Claire DeCaprio.
 Hereinafter, all references to petitioner shall be to petitioner
 Ferdinand DeCaprio.
                                   - 3 -
* 50 percent of the interest due on $17,045, $4,553, and $6,452 for 1983,
1984, and 1985, respectively.

     Petitioner resided in Montvale, New Jersey, at the time the

petition was filed.

     In the petition, petitioner alleged, inter alia, that

assessment of the deficiencies in, and additions to, tax for

1983, 1984, and 19853 is barred by the statute of limitations.

     On July 11, 1994, respondent filed an answer to the petition

in which she denied all substantive allegations of fact and error

and affirmatively alleged, inter alia:

          7.   FURTHER ANSWERING the petition, and as a
     defense to the assignment of error that the statute of
     limitations bars the assessment and collection of the
     deficiencies in income tax and the additions to tax due
     from the petitioners for the taxable years 1983, 1984,
     1985 * * * , the respondent alleges:

               (a) The income tax due from the petitioners
     for the years 1983, 1984, 1985 * * * may be assessed,
     or a proceeding in Court for the collection of such tax
     may be begun without assessment, at any time under the
     provisions of I.R.C. § 6501(c)(1), because the peti-
     tioners filed false or fraudulent income tax returns
     for said years with intent to evade tax, as is more
     fully set forth by the facts alleged in paragraph 8
     below setting forth the details of the fraud, which
     facts are relied upon by the respondent as a defense to
     any issue involving the statute of limitations.

          8.   FURTHER ANSWERING the petition, and in sup-
     port of the determination that part of the underpayment
     of tax required to be shown on the petitioners' income

3
   Petitioner also alleged, inter alia, that assessment of the
deficiencies in, and additions to, tax for 1986 is barred by the
statute of limitations. However, in light of the representations
in respondent's motion that, for 1986, (1) there is no deficiency
in income tax due from, or overpayment due to, petitioner and
(2) there are no additions to tax due from petitioner under secs.
6653(b)(1)(A) and (B) and 6661, we shall not address any allega-
tions in any of the pleadings relating to 1986.
                         - 4 -

tax returns for the taxable year 1983 is due to fraud
on the part of petitioner Ferdinand DeCaprio, the
respondent affirmatively relies upon the doctrine of
collateral estoppel (estoppel by judgment) and alleges:

          (a) Ferdinand DeCaprio, one of the petition-
ers herein, is the same person who was the defendant in
the criminal case of United States of America v.
Ferdinand DeCaprio (Southern District of New York,
Docket No. 89 Cr. 981).

          (b) The respondent herein is a party in
privity with the United States of America, the prose-
cuting party in the aforesaid criminal case in which
Petitioner Ferdinand DeCaprio was the defendant.

          (c) There was a waiver of indictment in the
aforesaid criminal case which took place before Magis-
trate Tyler.

          (d) On December 20, 1989, Petitioner
Ferdinand DeCaprio appeared before Judge Gerard L.
Goettel, District Court Judge, Southern District of New
York, and pled guilty under I.R.C. § 7201 to evading
income taxes in the taxable year 1983.

          (e) Among the questions asked by Judge
Goettel during Petitioner Ferdinand DeCaprio's
allocution was whether he willfully filed a false and
fraudulent income tax return for the taxable year 1983
with intent to evade and defeat income tax, and whether
he did in fact by such means understate a part of the
income tax due and owing by him to the United States of
America for said year. Petitioner answered in the
affirmative to these questions.

          (g) One of the issues in the instant case is
whether the addition to tax imposed by I.R.C. § 6653(b)
should be imposed against Petitioner Ferdinand DeCaprio
for the taxable year 1983.

          (h) The issue in the instant case is the
same as the issue which was presented in the aforesaid
criminal case and determined adversely to petitioner
Ferdinand DeCaprio since the court accepted his guilty
plea. Both the imposition of the addition to tax
against the petitioner for the taxable year 1983, under
I.R.C. § 6653(b), and the guilty plea for violation of
I.R.C. § 7201 are each dependent upon findings that the
petitioner for the taxable year 1983 did in fact file a
                         - 5 -

false and fraudulent income tax return, and that by
reason of such fraud, there is for said year an under-
payment of income tax.

          (i) The prior guilty plea by Petitioner
Ferdinand DeCaprio is conclusive and binding on him,
and by reason thereof, he is estopped in the instant
case under the doctrine of collateral estoppel
(estoppel by judgment), from denying herein that he
willfully filed a false and fraudulent income tax
return for the taxable year 1983 with intent to evade
and defeat a part of the income tax due and owing by
him for said year, and that due to such fraud there is
for said year an underpayment of tax within the meaning
of I.R.C. § 6653(b).

          (j) By reason of such a guilty plea, peti-
tioner Ferdinand DeCaprio is estopped in the instant
case, under the doctrine of collateral estoppel
(estoppel by judgment), from denying that a part of the
underpayment of income tax for the taxable year 1983 is
due to fraud, and that, therefore, he is liable for the
addition to tax imposed by I.R.C. § 6653(b), as deter-
mined by respondent in the statutory notice of defi-
ciency, upon which notice the instant case is based.

     9.   FURTHER ANSWERING the petition, and in sup-
port of the determination that part of the underpay-
ments of tax required to be shown on the petitioners'
income tax returns for the taxable years 1983, 1984,
1985 * * * are due to fraud on the part of Petitioner
Ferdinand DeCaprio, the respondent alleges:

          (a) On December 20, 1989, petitioner
Ferdinand DeCaprio appeared before Judge Gerard L.
Goettel, District Court Judge, Southern District of New
York, and pled guilty to evading income taxes in the
taxable year 1983.

          (b) On that same date, Petitioner Ferdinand
DeCaprio allocuted, under penalty of perjury or false
statement, that during the taxable years 1983 through
1986, he was the owner of two businesses, All Conserva-
tion, Inc. and Nationwise Exterminating and Deodoriz-
ing, Inc., which were engaged in pest control and
extermination.

          (c) On that same date, petitioner Ferdinand
DeCaprio allocuted, under penalty of perjury or false
statement, that during the taxable years 1983 through
                         - 6 -

1986, he received unreported cash income from the two
businesses that he owned and that these cash receipts
were unreported in the corporate books.

          (d) On that same date, petitioner Ferdinand
DeCaprio allocuted, under penalty of perjury or false
statement, that the additional unreported income that
he received was as follows: $66,000 during the taxable
year 1983; $16,798 during the taxable year 1984;
$19,835 during the taxable year 1985; * * *

          (e) On that same date, petitioner Ferdinand
DeCaprio allocuted, under penalty of perjury or false
statement, that he used the unreported cash income to
pay for his personal expenses.

          (f) On that same date, petitioner Ferdinand
DeCaprio allocuted, under penalty of perjury or false
statement, that he knew it was illegal to not report on
his income tax return the additional cash income listed
in subparagraph (d) above.

          (g) On that same date, petitioner Ferdinand
DeCaprio allocuted, under penalty of perjury or false
statement, that the medication he was using at that
time did not affect his ability to think.

          (h) [P]etitioner Ferdinand DeCaprio's fraud-
ulent omission of specific items of income on his
income tax returns filed for the taxable years 1983,
1984, 1985 * * *, is a part of a * * * pattern of
intent to evade taxes.

          (i) Petitioner Ferdinand DeCaprio under-
stated his taxable income on his income tax returns for
the taxable years 1983, 1984, 1985 * * *, in the
amounts of $66,000, $16,798, $19,835, * * *, respec-
tively.

          (j) Petitioner Ferdinand DeCaprio under-
stated his income tax liabilities on his income tax
returns for the taxable years 1983, 1984, 1985 * * *,
in the amounts of $22,380, $7,474, $9,587, * * *,
respectively.

          (k) Petitioner Ferdinand DeCaprio fraudu-
lently, and with intent to evade tax, omitted from his
income tax returns for the taxable years 1983, 1984,
1985 * * * income in the amounts of $66,000, $16,798,
$19,835, * * *, respectively.
                                - 7 -

               (l) A part of each deficiency in income tax
     for the taxable years 1983, 1984, 1985 * * * is due to
     fraud with intent to evade.

     On August 29, 1994, petitioner filed a reply to respondent's

answer.   In that reply, petitioner denied generally the detailed

allegations contained in paragraphs 7, 8, and 9 of the answer and

made various allegations, including that (1) petitioners did not

file false or fraudulent income tax returns for 1983, 1984, or

1985; (2) the assertion of the additions to tax under section

6653(b) against petitioner is invalid under the double jeopardy

clause of the Fifth Amendment to the U.S. Constitution (Fifth

Amendment); (3) petitioner did not have the requisite mental

state to comprehend the meaning and import of the proceedings in

United States v. Ferdinand DeCaprio No. 89 Cr. 981 (S.D.N.Y.)

(criminal tax proceedings) at the time of their occurrence or to

enter a knowing and voluntary guilty plea in those proceedings;

and (4) "Petitioners are not required to respond to this allega-

tion because it states legal conclusions rather than allegations

of fact."

     Petitioner alleged the following in the reply with respect

to paragraph 9 in the answer:

          (9) Allege that as to petitioner Ferdinand
     DeCaprio, the assertion of the addition to tax imposed
     by I.R.C. § 6653(b) is invalid under the double jeop-
     ardy clause of the Fifth Amendment to the U.S. Consti-
     tution.

               (a) Admit that the petitioner Ferdinand
     DeCaprio appeared before Judge Goettel on December 20,
     1989, but deny that Mr. DeCaprio had the requisite
     mental state to enter a knowing and voluntary guilty
                              - 8 -

     plea.

               (b) Deny and allege that Mr. DeCaprio did
     not have the requisite mental state to comprehend the
     meaning and import of any questions posed or answers
     giving [sic] concerning these issues.

               (c) Deny and allege that Mr. DeCaprio did
     not have the requisite mental state to comprehend the
     meaning and import of the questions posed and answers
     provided concerning these issues.

               (d) Deny and allege that Mr. DeCaprio did
     not have the requisite mental state to comprehend the
     meaning and import of the questions posed and answers
     provided concerning these issues.

               (e) Deny and allege that Mr. DeCaprio did
     not have the requisite mental state to comprehend the
     meaning and import of the questions posed and answers
     provided concerning these issues.

               (f) Deny and allege that Mr. DeCaprio did
     not have the requisite mental state to comprehend the
     meaning and import of the questions posed and answers
     provided concerning these issues.

               (g) Deny and allege that Mr. DeCaprio did
     not have the requisite mental state to comprehend the
     meaning and import of the questions posed and answers
     provided concerning these issues.

               (h)   Deny.

               (i)   Deny.

               (j)   Deny.

               (k)   Deny.

               (l)   Deny.

     In respondent's motion, respondent represents, inter alia,

that (1) around sometime after November 3, 1995, and prior to May

10, 1996, petitioner's then counsel John J. Tigue, Jr. (Mr.

Tigue) held a conference with respondent's appeals officer
                              - 9 -

assigned to this case and ultimately reached a basis of settle-

ment and that that appeals officer prepared decision documents

reflecting that settlement which he sent to Mr. Tigue for review

and execution on or about May 10, 1996; (2) on June 7, 1996,

respondent's counsel received a telephone call from Mr. Tigue

during which Mr. Tigue indicated that petitioner would not

execute the decision documents or proceed to trial and that Mr.

Tigue intended to file a motion to withdraw; (3) respondent's

counsel advised Mr. Tigue that respondent would file a motion to

dismiss for lack of prosecution if petitioner failed to execute

the decision documents and did not intend to proceed to trial;

(4) on June 10, 1996, respondent's counsel telephoned Mr. Tigue

who informed him that petitioner still refused to sign the

decision documents and that Mr. Tigue would file a motion to

withdraw as counsel; and (5) on June 11, 1996, respondent's

counsel telephoned Mr. Tigue, and during that call Mr. Tigue

informed respondent's counsel that Mr. Tigue had filed a motion

to withdraw as counsel, and respondent's counsel thereupon

advised Mr. Tigue of respondent's intent to file respondent's

motion.

     On June 11, 1996, Mr. Tigue filed a motion to withdraw as

counsel pursuant to Rule 24(c) (Mr. Tigue's motion to withdraw).

In support of that motion, Mr. Tigue represented, inter alia,

that petitioner had advised him that petitioner "does not intend

to proceed to trial on June 17 or on any other date * * * [and
                               - 10 -

that] petitioner has rejected the final proposed settlement offer

from the respondent."    Mr. Tigue's motion to withdraw was set for

hearing on June 17, 1996, at the Court's trial session at New

York, New York (trial session).

     On June 17, 1996, this case was called from the calendar at

the trial session, and Mr. Tigue and Kevin M. Flynn, counsel for

petitioner Claire DeCaprio, appeared, but petitioner did not

appear.   Counsel for respondent also appeared and filed respon-

dent's motion.   On the same date, this case was recalled from the

calendar at the trial session for hearing (hearing) on both Mr.

Tigue's motion to withdraw and respondent's motion.    Petitioner

appeared at that hearing, as did Mr. Tigue and counsel for

respondent.

     With respect to Mr. Tigue's motion to withdraw and respon-

dent's motion, petitioner informed the Court at the hearing that

he did not intend to settle this case and that he did not intend

to proceed to trial.    The Court granted Mr. Tigue's motion to

withdraw and took respondent's motion under advisement.

     Petitioner has the burden of proof on all issues remaining

in this case except the additions to tax for fraud.4   Rule 142(a)


4
   Although petitioner alleged in the petition that assessment of
the deficiencies in, and additions to, tax for 1983, 1984, and
1985 is barred by the statute of limitations, petitioner has the
burden, which he has failed to satisfy, of proving when the
returns for those years were filed and when the period of limita-
tions applicable to those years expired. See Miami Purchasing
Service Corp. v. Commissioner, 76 T.C. 818, 823 (1981). More-
over, we find below that respondent has established fraud for
                                                   (continued...)
                              - 11 -

and (b).   Respondent has the burden of proof with respect to

those additions to tax, which she must satisfy by clear and

convincing evidence.   Sec. 7454(a); Rule 142(b).

     In Mr. Tigue's motion to withdraw, Mr. Tigue represented

that petitioner had advised him that he did not intend to settle

this case or to proceed to trial.   At the hearing on that motion

and respondent's motion, petitioner appeared and confirmed what

Mr. Tigue had represented in that motion when petitioner indi-

cated that he did not intend to settle this case or to proceed to

trial.   We find that, by so indicating, petitioner unequivocally

informed the Court that he will not contest any of the deficien-

cies in, or additions to, tax that remain at issue.   Such a

statement by petitioner may be characterized as either an aban-

donment of all issues remaining in this case or a failure other-


4
 (...continued)
each of the years 1983, 1984, and 1985, and, consequently, the
statute of limitations for each of those years does not bar
assessment of the deficiencies in, and additions to, tax that are
due from petitioner for each of those years. Sec. 6501(c)(1);
see DiLeo v. Commissioner, 96 T.C. 858, 880 (1991), affd. 959
F.2d 16 (2d Cir. 1992).

   In the answer, respondent alleged as an alternative to the
additions to tax for fraud that petitioner is liable for the
additions to tax for negligence under sec. 6653(a)(1) and (2) for
1983, 1984, and 1985 and under sec. 6653(a)(1)(A) and (B) for
1986. Respondent had not made any such determinations in the
notice. Since respondent raised the alternative additions to tax
for negligence by affirmative allegations in the answer and did
not determine them in the notice, respondent bears the burden of
proof as to those alternative additions to tax. Rule 142(a).
Respondent's motion does not specifically request a default
decision as to the alternative additions to tax for negligence,
and we therefore consider them to have been abandoned by respon-
dent. See Rybak v. Commissioner, 91 T.C. 524, 566 (1988).
                              - 12 -

wise to proceed under Rule 123(a).5    Consequently, even though

petitioner initially denied fraud in the reply, it is within our

discretion under Rule 123(a) to enter a default decision sustain-

ing all deficiencies in, and additions to, tax remaining in this

case, including the additions to tax under section 6653(b) for

1983, 1984, and 1985, without requiring respondent to prove fraud

affirmatively.6   Gordon v. Commissioner, 73 T.C. 736, 740-742

(1980).   It would be a waste of the Court's time and resources to

require affirmative proof of fraud in the present case where

petitioner has unequivocally indicated that he will no longer

contest, inter alia, the additions to tax under section 6653(b).

Id. at 742.

     Under the particular circumstances presented here, we find

that petitioner has not only failed to carry his burden of proof

as to all issues remaining in this case on which he has the



5
   Rule 123(a) provides in pertinent part that a party may be
held in default if such party "has failed to plead or otherwise
proceed as provided by these Rules".
6
   We note that we find no merit in petitioner's allegation in
the reply that the additions to tax for fraud are invalid under
the double jeopardy clause of the Fifth Amendment. The addition
to tax for fraud is a civil, and not a criminal, provision that
was enacted "primarily as a safeguard for the protection of the
revenue and to reimburse the Government for the heavy expense of
investigation and the loss resulting from the taxpayer's fraud."
Helvering v. Mitchell, 303 U.S. 391, 401 (1938). It is well
established that a conviction for tax fraud under sec. 7201 and
the imposition of the addition to tax for fraud under sec.
6653(b) do not place a taxpayer in double jeopardy within the
meaning of the Fifth Amendment. See Helvering v. Mitchell, supra
at 399-404; United States v. Alt, 83 F.3d 779, 781-784 (6th Cir.
1996); Ianniello v. Commissioner, 98 T.C. 165, 176-185 (1992).
                              - 13 -

burden of proof (viz., the deficiencies for 1983, 1984, and 1985

and the additions to tax under section 6661 for 1983 and 1985),7

he also has defaulted within the meaning of Rule 123(a).

      Our finding of default here has the effect of deeming

admitted all of respondent's allegations in the answer relating

to, inter alia, the fraud issue.   We have examined those allega-

tions and find them to be sufficient, if taken to be true by

petitioner's default, to show the existence of fraud for each of

the years 1983, 1984, and 1985.8   See Smith v. Commissioner, 91

T.C. 1049, 1059 (1988), affd. 926 F.2d 1470 (6th Cir. 1991);

Rechtzigel v. Commissioner, 79 T.C. 132, 142 (1982), affd. 703

F.2d 1063 (8th Cir. 1983).

      Specifically, we find that the answer details facts showing

that petitioner did not report certain cash income he received

during each of the years 1983, 1984, and 1985 and that petitioner

knew it was illegal not to report such income.9

      We hold petitioner in default as to the deficiencies in, and



7
    See supra note 4, first paragraph.
8
   We therefore need not address respondent's allegations in the
answer in support of her position that petitioner is collaterally
estopped from denying fraud for 1983.
9
   In particular, the answer states, inter alia, that at the
criminal tax proceedings, petitioner allocuted, under penalty of
perjury or false statement, that, inter alia, during 1983, 1984,
and 1985, he received unreported cash income from two businesses
that he owned, that those cash receipts were not reported in the
books of those businesses, that he used the unreported income to
pay his personal expenses, and that he knew it was illegal not to
report the unreported income in his income tax returns.
                             - 14 -

additions under sections 6653(b) and 6661 to, tax that remain in

dispute for the years 1983, 1984, and 1985.   Accordingly, respon-

dent's motion will be granted.

     To reflect the foregoing,



                                   An appropriate order and

                         decision will be entered.
