                        T.C. Memo. 1999-51



                      UNITED STATES TAX COURT



                JAMES J. BROOKBANK, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 22898-96.             Filed February 25, 1999.



     James J. Brookbank, pro se.

     Louis H. Hill, for respondent.



                        MEMORANDUM OPINION


     GALE, Judge:   Respondent determined deficiencies in and

additions to petitioner's Federal income taxes as follows:
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                                   Additions to Tax, I.R.C.
                             Sec.            Sec.           Sec.
Year       Deficiency     6653(b)(1)      6653(b)(2)        6654

1982       $ 4,551         $2,276       50%   of   interest     $444
                                        due   on   $4,551
1983         6,401          3,201       50%   of   interest      392
                                        due   on   $6,401
1984        15,843          7,922       50%   of   interest      997
                                        due   on   $15,843


Unless otherwise indicated, all section references are to the

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

Rule references are to the Tax Court Rules of Practice and

Procedure.

       Petitioner did not appear for trial.   Respondent filed

motions for judgment by default and for a penalty under section

6673.

Respondent's Motion for Judgment by Default

       Respondent's Motion for Judgment by Default relies on facts

and evidence deemed stipulated pursuant to an Order of the Court

made under Rule 91(f)(3) and, in addition, on facts pleaded in

the answer.    Respondent contends that those materials are

sufficient to carry respondent's burden of proof because of

petitioner's default, relying on Smith v. Commissioner, 91 T.C.

1049 (1988), affd. 926 F.2d 1470 (6th Cir. 1991).        Respondent,

however, also called two witnesses in further support of

respondent's determination of fraud.    The witnesses testified to

income paid to petitioner during the years in issue and

admissions made by petitioner about avoiding payment of income
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taxes by putting assets in the names of family members.    The

facts pleaded in the answer and supported in many instances by

the stipulated facts and evidence are summarized below.

                             Background

     Petitioner resided in Ohio at the time that he filed his

petition.    During 1982, 1983, and 1984, petitioner was engaged in

the business of selling life insurance.    During those years, he

was employed by and received commissions from various life

insurance companies.    Petitioner received total income from these

sources of $20,094.50 in 1982, $28,656.12 in 1983, and $47,287.84

in 1984.    (The specific amounts paid to petitioner by each

insurance company during each year were set out in detail in the

answer, and supporting documents, including canceled checks and

commission records, were deemed stipulated.)

     During 1983 and 1984, petitioner caused substantial portions

of his income to be deposited into a bank account maintained in

the name of his mother and his daughter.    Payments out of that

bank account were made for petitioner's use.    Petitioner acquired

automobiles and caused them to be registered in the name of his

daughter.

     On or about the due dates for his income tax returns for

1982, 1983, and 1984, petitioner prepared Forms 1040 and mailed

them to the Cincinnati Service Center of the Internal Revenue

Service.    The Forms 1040 included his name, Social Security

number, address, filing status, and claim of one exemption.      The
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phrase "Object--Self Incrimination" was typed on the lines of the

forms designed for financial information and computations.

Petitioner did not include any financial information on any of

the Forms 1040 for 1982, 1983, or 1984 that he sent to the

Service Center.   Petitioner was promptly notified by the Internal

Revenue Service that the Forms 1040 were not acceptable as income

tax returns and that he was required to file Federal income tax

returns.

     On July 10, 1991, petitioner was convicted of willful

failure to file Federal income tax returns for 1983 and 1984 in

violation of section 7203.   Petitioner was sentenced to prison,

but his sentence was suspended and he was placed on probation on

condition that he file income tax returns by December 15, 1991.

Petitioner failed to file the returns within that time and, on

December 20, 1991, his prison sentence was reimposed.

     Petitioner's failure to file Federal income tax returns for

1982, 1983, and 1984 was part of an 8-year pattern of failure to

file tax returns commencing in 1977.      Petitioner fraudulently

failed to report income tax liabilities of $4,551, $6,401, and

$15,843 for 1982, 1983, and 1984, respectively, and all or part

of the underpayment of income tax for those years is due to fraud

with intent to evade tax.

                             Discussion

     In Smith v. Commissioner, 926 F.2d 1470 (6th Cir. 1991),

affg. 91 T.C. 1049 (1988), the Court of Appeals for the Sixth
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Circuit, to which this case is appealable, sustained a default

judgment, including additions to tax for fraud, against a

taxpayer who failed to appear for trial.

     In this case, as appears from the procedural history set

forth below in relation to respondent's motion for a penalty

under section 6673, there is every reason to believe that

petitioner's default was willful and was a continuation of his

history of willful and flagrant disregard of his tax liabilities.

At no time during this proceeding has he offered evidence of any

reasonable dispute with respect to the facts alleged and relied

on by respondent.

     Respondent's specific allegations, generally supported by

the evidence deemed stipulated, set forth sufficient facts for

respondent to carry his burden of proof.   Failure to file

returns, failure to report income over a period of years, failure

to pay tax over a period of years, and concealment of assets are

common badges of fraud.   See, e.g., Bradford v. Commissioner, 796

F.2d 303, 307-308 (9th Cir. 1986), affg. T.C. Memo. 1984-601.

Under these circumstances, respondent's burden of proof is

satisfied.   See Smith v. Commissioner, supra.   Respondent's

motion for default judgment should be granted, and the

deficiencies and additions to tax determined by respondent should

be sustained in full.
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Respondent's Motion Under I.R.C. Section 6673

     The stipulated evidence establishes that petitioner filed

so-called "Fifth Amendment" Forms 1040 for the years in issue;

that he was advised promptly by the Internal Revenue Service that

the Forms 1040 were not proper tax returns; that he was convicted

of failure to file tax returns for 2 of the 3 years in issue; and

that he failed to comply with the terms of probation requiring

him to file proper tax returns and, as a result, was sentenced to

prison.   Throughout this proceeding, however, petitioner has

contended that he was not required to file tax returns for the

years in issue.   Petitioner filed a frivolous reply to the

answer, a frivolous response to requests for admissions, and a

frivolous response to the Court's Order to Show Cause under

Rule 91(f)(2).    In an Order deeming certain matters stipulated,

the Court stated:

     we have concluded in this Order that a substantial
     number of petitioner's responses were "evasive or not
     fairly directed" to the proposed stipulation. Should
     petitioner persist in conducting the litigation in this
     manner, further sanctions may be imposed. Petitioner's
     attention is directed to Section 6673(a) of the
     Internal Revenue Code, which provides that whenever it
     appears to the Tax Court that proceedings before it
     have been instituted or maintained by the taxpayer
     primarily for delay, or the taxpayer's position is
     frivolous or groundless, the Court may require the
     taxpayer to pay a penalty of up to $25,000. [Order
     dated January 29, 1998.]

Less than 3 weeks after the date of that Order, petitioner served

on respondent frivolous requests for admissions repeating his

allegations that his compensation was not taxable income.
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Shortly before trial, petitioner attempted to withdraw his

petition, again asserting a variety of frivolous arguments.

     Notwithstanding repeated warnings, petitioner persisted in

ignoring the facts and law applicable to his case.     His conduct

was patently willful.   Because he was on notice of the lack of

merit to his claims, his positions were taken in bad faith.        We

conclude that petitioner's conduct in this case justifies a

penalty under section 6673 in the amount of $15,000.     See Granado

v. Commissioner, 792 F.2d 91 (7th Cir. 1986), affg. T.C. Memo.

1985-237; Sloan v. Commissioner, 102 T.C. 137, 148-149 (1994),

affd. 53 F.3d 799 (7th Cir. 1995); Singer v. Commissioner, T.C.

Memo. 1990-222, affd. without published opinion 935 F.2d 1282 (3d

Cir. 1991).

     Both of respondent's motions will be granted.

                                            An appropriate order and

                                       decision will be entered.
