                       T.C. Memo. 2001-60



                     UNITED STATES TAX COURT



          NATHAN SNYDER AND GAIL SNYDER, Petitioners v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 11951-99.                    Filed March 12, 2001.



     Kenneth E. Keate, for petitioners.

     Melissa J. Hedtke, for respondent.



                       MEMORANDUM OPINION

     DINAN, Special Trial Judge:    Respondent determined a

deficiency in petitioners’ Federal income tax in the amount of

$4,028 for the taxable year 1997.   Rule references are to the Tax

Court Rules of Practice and Procedure.
                                   - 2 -

       After a concession by petitioners,1 the issues for decision

are:       (1) Whether petitioners are entitled to claimed itemized

deductions or to the standard deduction in lieu thereof; (2)

whether petitioners are entitled to a deduction for car and truck

expenses for their business; and (3) whether petitioners are

entitled to a deduction for legal and professional expenses for

their business.2

       Some of the facts have been stipulated and are so found.

The stipulations of fact and the attached exhibits are

incorporated herein by this reference.       In addition, certain

facts are deemed to have been admitted by petitioners, as

discussed below.       Petitioners resided in Columbia Heights,

Minnesota, on the date the petition was filed in this case.

       Petitioners filed a joint Federal income tax return for the

taxable year 1997.       On the return, petitioners claimed a

miscellaneous itemized deduction for employment agency fees of

$5,300.       Filed with the return was a Schedule C, Profit or Loss

From Business, for a “service-insurance” business named “NP

Snyder Agency,” on which petitioners claimed deductions for,




       1
      At trial petitioners conceded the correct amount of the
State income tax refund includable in income is $2,463, rather
than $949 as reported on their return.
       2
      Adjustments to self-employment income tax and the deduction
therefor are computational and will be resolved by the Court’s
holding on the issues in this case.
                               - 3 -

inter alia, car and truck expenses of $5,050 and legal and

professional services of $13,870.

     In the statutory notice of deficiency, respondent disallowed

the deduction for the employment agency fees because petitioners

failed to show the expense was paid during the taxable year and

that the expense was an ordinary and necessary business expense.

As a result, petitioners’ remaining itemized deductions are less

than the standard deduction of $6,900, which respondent

accordingly allowed in lieu thereof.   Respondent also disallowed

petitioners’ Schedule C business deductions listed above because

petitioners failed to show that they were eligible for them.

     On January 7, 2000, after the filing of the petition and the

answer in this case, respondent served on counsel for petitioners

requests for admissions.   The requests set forth the following

relevant matters:

          5.   The correct amount of petitioners’ miscellaneous
     itemized deductions for 1997 was zero ($0.00) as determined
     by respondent.

          15. The correct amount of petitioners’ Schedule C
     car/truck expense for 1997 was zero ($0.00) as determined by
     respondent.

          20. The correct amount of petitioners’ Schedule C
     legal/professional expense for 1997 was zero ($0.00) as
     determined by respondent.

Petitioners never filed answers to the requests for admissions

with the Court as required by Rule 90(c), and according to

respondent’s undisputed assertion petitioners did not serve such
                                 - 4 -

answers on respondent within the 30-day period specified by Rule

90(c).    Therefore, each matter in the requests is deemed admitted

and is conclusively established for purposes of this case.          See

Rule 90(c), (f).   Petitioners did not move to permit withdrawal

or modification of the admissions as permitted under Rule 90(f).

Consequently, the evidence presented at trial may be used to

place the admitted facts in a different light, but not to impeach

them.    See Dahlstrom v. Commissioner, 85 T.C. 812, 821 (1985).

     The deemed admissions listed above dispose of all the issues

in this case.3   No credible evidence was submitted at the trial

of this case to contradict the admissions.       We therefore uphold

respondent’s determinations in their entirety.

     To reflect the foregoing,

                                         Decision will be entered

                                 for respondent.




     3
      Although petitioners argued in the petition that they were
entitled to deductions not claimed on the original return (and no
deemed admissions precluded petitioners’ presentation of evidence
concerning such deductions), no evidence was presented at trial
supporting this argument.
