                              T.C. Memo. 2016-153



                        UNITED STATES TAX COURT



                 ALFRED B. BARRION, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket No. 7245-15.                          Filed August 15, 2016.



      Alfred B. Barrion, pro se.

      Steven Tillem and Gennady Zilberman, for respondent.



                          MEMORANDUM OPINION


      LAUBER, Judge: With respect to petitioner’s Federal income tax for 2012,

the Internal Revenue Service (IRS or respondent) determined a $52,584 deficiency

in tax and additions to tax of $1,670 and $891 under section 6651(a)(1) and (2),
                                         -2-

[*2] respectively.1 Respondent has moved for summary judgment under Rule 121,

contending that there are no disputed issues of fact and that he is entitled to

judgment as a matter of law. Petitioner has not responded to this motion. We will

grant the motion for summary judgment and sustain respondent’s determinations.

                                     Background

      The following facts are derived from the parties’ pleadings and respondent’s

motion papers, including the affidavits and exhibits attached thereto. Petitioner

resided in New York when he filed his petition.

      Petitioner did not file a Federal income tax return for 2012. On the basis of

third-party reporting, the IRS prepared a substitute for return (SFR) that met the

requirements of section 6020(b). On December 8, 2014, the IRS sent petitioner a

timely notice of deficiency determining a tax deficiency and additions to tax as set

forth above.

      The IRS’ adjustments involved unreported income. It determined that

petitioner had wage income of $204,805 on the basis of a Form W-2, Wage and

Tax Statement, received from Van Eck Associates. The IRS also determined that

petitioner had interest income of $73 on the basis of two Forms 1099-INT, Interest

      1
        All statutory 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. We round all dollar amounts to the nearest dollar.
                                         -3-

[*3] Income, submitted by CitiBank N.A. Allowing petitioner the standard

deduction and one personal exemption, the IRS determined for 2012 a tax

deficiency of $52,854, resulting in a net tax liability of $7,423 after applying

$45,431 of withholding credits shown on the Form W-2.

      Petitioner timely petitioned this Court on March 16, 2015. In his petition,

he did not assign error with respect to either item of unreported income. He

instead asserted: “I had a hard drive failure and lost data. I would like to file my

own return for 2012.”

      On November 12, 2015, respondent served petitioner with a request for ad-

missions, a request for production of documents, and interrogatories. In these re-

quests respondent asked petitioner to: (1) admit to having received the items of

unreported income listed above; (2) admit to having failed to file a return for tax-

able year 2012; (3) provide documentation showing any deductions, exemptions,

or credits to which he believed himself entitled; and (4) provide any information

tending to show that he was not liable for the late-filing and late-payment

additions to tax. Petitioner ignored all of these discovery requests. Because he

failed to respond to the request for admissions, the matters therein were deemed

admitted. See Rule 90(c).
                                         -4-

[*4] On January 29, 2016, respondent filed motions to compel petitioner to re-

spond to the request for production of documents and interrogatories. These mo-

tions requested that, if petitioner failed to comply in full with any order of the

Court in respect of the motions to compel, he should be precluded from: (1)

contesting the unreported income determined in the notice of deficiency; (2)

claiming any deductions, exemptions, or credits for 2012 aside from the standard

deduction and personal exemption allowed in the notice of deficiency; and (3)

challenging the additions to tax for 2012 as determined in the notice of deficiency.

      By order dated February 2, 2016, we granted respondent’s motions to

compel and directed petitioner, on or before March 3, 2016, to comply with

respondent’s discovery requests or to file with the Court specific objections

thereto. In that order, we explicitly warned petitioner that, if he “does not fully

comply with the provisions of this Order, the Court will be strongly inclined to

impose sanctions pursuant to Tax Court Rule 104, which may include deeming

certain facts to be established for purposes of trial, or dismissal of this case and

entry of a decision against petitioner.” Petitioner did not comply with our order in

any respect. He supplied no responses to respondent’s discovery requests, and he

filed no objections thereto.
                                       -5-

[*5] Respondent filed a motion for summary judgment on March 15, 2016. In

his motion respondent contends that there are no disputed issues of material fact

because all relevant facts have either been deemed admitted by petitioner or

should be deemed to have been admitted by him by reason of his failure to comply

with the Court’s February 2, 2016, order granting the motions to compel. On

March 17, 2016, we ordered petitioner to respond to the motion for summary

judgment by April 18, 2016. We warned him that “under Tax Court Rule 121(d),

judgment may be entered against a party who fails to respond to a Motion for

Summary Judgment.” Petitioner ignored this order and has not responded to

respondent’s motion.

                                    Discussion

A.    Summary Judgment Standard

      The purpose of summary judgment is to expedite litigation and avoid costly,

time-consuming, and unnecessary trials. Fla. Peach Corp. v. Commissioner, 90

T.C. 678, 681 (1988). Under Rule 121(b) the Court may grant summary judgment

when there is no genuine dispute as to any material fact and a decision may be

rendered as a matter of law. Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520

(1992), aff’d, 17 F.3d 965 (7th Cir. 1994). In deciding whether to grant summary

judgment, we construe factual materials and inferences drawn from them in the
                                        -6-

[*6] light most favorable to the nonmoving party. Ibid. However, the nonmoving

party “may not rest upon the mere allegations or denials” of his pleadings but

instead “must set forth specific facts showing that there is a genuine dispute for

trial.” Rule 121(d); see Sundstrand Corp., 98 T.C. at 520.

      Petitioner has set forth no facts showing that there is a genuine dispute for

trial. Because he failed to respond to the motion for summary judgment, we could

enter a decision against him for that reason alone. See Rule 121(d). We will

nevertheless consider the motion on its merits. We conclude that there are no

material facts in dispute and that this case is appropriate for summary adjudication.

B.    Unreported Income

      The IRS’ determinations in a notice of deficiency are generally presumed

correct, and the taxpayer bears the burden of proving those determinations erro-

neous. Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). For this pre-

sumption to adhere in cases involving receipt of unreported income, respondent

must provide some reasonable foundation connecting the taxpayer to the income-

producing activity. See, e.g., Blohm v. Commissioner, 994 F.2d 1542, 1549 (11th

Cir. 1993), aff’g T.C. Memo. 1991-636; Weimerskirch v. Commissioner, 596 F.2d

358, 362 (9th Cir. 1979), rev’g 67 T.C. 672 (1977); Tucker v. Commissioner, T.C.

Memo. 2014-51, at *12. Once respondent has produced evidence linking the
                                        -7-

[*7] taxpayer to an income-producing activity, the burden of proof shifts to the

taxpayer to prove by a preponderance of the evidence that respondent’s

determinations are arbitrary or erroneous. Helvering v. Taylor, 293 U.S. 507, 515

(1935); Tokarski v. Commissioner, 87 T.C. 74, 76-77 (1986).

      The notice of deficiency determined two adjustments involving unreported

income. The IRS received a Form W-2 from Van Eck Associates reporting wages

it paid to petitioner during 2012, and the IRS received two Forms 1099-INT from

CitiBank N.A. reporting interest it paid to petitioner during 2012. On the basis of

this credible evidence, we are satisfied that respondent provided a reasonable

foundation connecting petitioner with the unreported income. The burden of proof

thus shifts to petitioner to show that respondent’s determinations were arbitrary or

erroneous.

      Petitioner has not satisfied his burden of proof. He failed to assign error in

his petition to either of respondent’s determinations of unreported income. Any

issue not raised in the assignments of error is deemed conceded. Rule 34(b)(4).

Respondent served discovery requests on petitioner asking that he admit receiving

the unreported income; because he failed to respond to these discovery requests,

he is deemed to have admitted receiving the unreported income. We conclude that

respondent’s determinations of unreported income, as set forth in the notice of
                                         -8-

[*8] deficiency, are correct, and those determinations are sustained. See Hardy v.

Commissioner, 181 F.3d 1002, 1004 (9th Cir. 1999), aff’g T.C. Memo. 1997-97;

Powerstein v. Commissioner, T.C. Memo. 2011-271, 102 T.C.M. (CCH) 497, 506.

C.    Deductions, Exemptions, and Credits

      Deductions are a matter of legislative grace, and the taxpayer bears the bur-

den of proving his entitlement to any deduction. Rule 142(a). The taxpayer also

bears the burden of substantiating his claimed deductions by keeping and produ-

cing records sufficient to enable the IRS to determine the correct tax liability. Sec.

6001; INDOPCO v. Commissioner, 503 U.S. 79, 84 (1992); sec. 1.6001-1(a), (e),

Income Tax Regs.

      In the November 12, 2015, discovery requests, respondent requested that

petitioner submit any documentation showing that he was entitled to additional

deductions, exemptions, or credits. Petitioner has set forth no specific facts con-

cerning, and he has provided no documentation to substantiate, any additional de-

ductions, exemptions, or credits. We accordingly sustain respondent’s determina-

tion that petitioner is entitled to no deductions, exemptions, or credits aside from

the standard deduction and one personal exemption as allowed in the notice of

deficiency.
                                         -9-

[*9] D.      Additions to Tax

      1.     Section 6651(a)(1)

      Section 6651 provides for an addition to tax of 5% of the tax required to be

shown on the return for each month or fraction thereof for which there is a failure

to file the return, not to exceed 25% in toto. Respondent has the burden of

production on this issue. See sec. 7491(c). Respondent served discovery requests

on petitioner asking that he admit that he failed to file a Federal income tax return

for 2012. Because petitioner failed to respond to this discovery request, he is

deemed to have admitted that he did not file such a return. In view of this deemed

admission, we conclude that respondent has satisfied his burden of production.

See, e.g., Marshall v. Commissioner, 85 T.C. 267, 272 (1985); Colonna v.

Commissioner, T.C. Memo. 2014-7, at *4; Snyder v. Commissioner, T.C. Memo.

2001-60.

      In his November 12, 2015, discovery requests, respondent asked petitioner

to provide any relevant information showing that he is entitled to relief from the

addition to tax under section 6651(a)(1). Petitioner failed to respond to those

requests. In his motion to compel, respondent asked that petitioner be precluded

from claiming relief from the addition to tax for failure to file timely. Petitioner

did not respond to our order granting the motion to compel, and he filed no
                                        - 10 -

[*10] objections to respondent’s requested discovery. We will accordingly sustain

respondent’s determination that petitioner is liable for the addition to tax under

section 6651(a)(1).

      2.     Section 6651(a)(2)

      Section 6651(a)(2) provides for an addition to tax when a taxpayer fails to

pay timely the tax shown on a return unless the taxpayer proves that the failure

was due to reasonable cause and not due to willful neglect. To meet his burden of

production under 7491(c) with respect to the section 6651(a)(2) addition to tax,

respondent must provide evidence of a tax return. Wheeler v. Commissioner, 127

T.C. 200, 208-211 (2006), aff’d, 521 F.3d 1289 (10th Cir. 2008). An SFR that

meets the requirements of section 6020(b) is treated as the “return” filed by the

taxpayer for this purpose. See sec. 6651(g). Respondent has met his burden of

production by producing a certified copy of the SFR prepared on petitioner’s

behalf. Cf. Gardner v. Commissioner, T.C. Memo. 2013-67, at *23-*24 (finding

that the Commissioner did not meet his burden of production for the section

6651(a)(2) addition to tax when he introduced the taxpayer’s account transcripts as

evidence of the SFR). Petitioner has not paid the tax shown on that return and has

not shown that his failure was “due to reasonable cause and not due to willful
                                         - 11 -

[*11] neglect.” See sec. 6651(a)(2). We will accordingly sustain the addition to

tax for petitioner’s failure to pay timely his income tax liability for 2012.

      To reflect the foregoing,



                                                  An appropriate order and decision

                                        will be entered.
