                        T.C. Memo. 1998-40



                      UNITED STATES TAX COURT



              JOSEPH L. GUILLO, SR., Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 24225-95.                    Filed February 3, 1998.



          Held: Respondent's motion for summary judgment is
     granted, and for 1986 through 1990, petitioner is
     liable for Federal income and self-employment taxes on
     unreported income and for additions to tax under secs.
     6651 and 6654, I.R.C.



     Joseph L. Guillo, Sr., pro se.

     Rachael J. Zepeda, for respondent.



                        MEMORANDUM OPINION


     SWIFT, Judge:   This case is before the Court under Rule

121(b) on respondent's motion for summary judgment as to
                                - 2 -

petitioner's liabilities for Federal income and self-employment

taxes on unreported income and for additions to tax under

sections 6651 and 6654.

     Respondent determined deficiencies and additions to tax with

respect to petitioner's Federal income and self-employment taxes,

as follows:


                                       Additions to tax
     Year        Deficiency     Sec. 6651(a)(1)     Sec. 6654

     1986          $16,505          $4,126            $ 796
     1987           20,009           5,002             1,080
     1988           17,234           4,309             1,102
     1989           20,522           5,131             1,389
     1990           15,886           3,972             1,045


     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.    All figures are rounded.

     When the petition was filed, petitioner resided in Sedona,

Arizona.

     For 1986 through 1990, petitioner failed to file Federal

income tax returns.    During audit, respondent reconstructed

petitioner's taxable income for the years in issue using the bank

deposits method.    On October 10, 1995, respondent issued to

petitioner a notice of deficiency with the above adjustments.

     On November 20, 1995, petitioner timely filed a petition for

the years in issue.    On January 22, 1996, respondent timely filed
                               - 3 -

an answer alleging, among other things, that because petitioner

failed to file Federal income tax returns for the years in issue,

the period of limitations on assessment had not expired.

Petitioner failed to respond to the answer, and on May 21, 1996,

this Court granted respondent's motion under Rule 37(c) for entry

of an order that the undenied allegations in respondent's answer

be deemed admitted.

     During discovery, petitioner consistently refused delivery

of and failed to respond to respondent's correspondence that was

mailed to petitioner.   On several occasions, messages, such as

"return to sender" or "no such person at this location", were

handwritten on the correspondence that was refused by petitioner

and returned to respondent.

     On October 4, 1996, after confirming petitioner's address

with petitioner over the telephone, respondent served on

petitioner two copies of requests for admission of factual

matter, one by regular first-class mail and one by certified

mail.   Petitioner did not respond to the requests for admission,

and, under Rule 90(c), each factual matter set forth in the

requests for admission was deemed admitted.

     Based on the above deemed admissions under Rules 37(c) and

90(c), the following facts are established in this case.

During 1986 through 1990, petitioner was married and was self-

employed as a chiropractor.   For the years in issue, petitioner

did not file Federal income tax returns.
                                - 4 -

     During the years in issue, petitioner maintained two joint

checking accounts numbered 604366 and 86409 at Peoples Bank of

Oxford.   Petitioner also maintained an account numbered 304380 at

Citadel Federal Credit Union.

     During 1986, 1987, 1988, 1989, and 1990, respectively, funds

totaling $41,459, $54,824, $57,825, $59,051, and $62,755 were

deposited into or credited to the above accounts on petitioner's

behalf.   The following schedule reflects for each year in issue

the bank or credit union, account number, and total funds

deposited into or credited to the above accounts.


                 Deposits/Credits for 1986
       Institution           Account No.      Deposits/Credits

Peoples Bank of Oxford           604366           $ 5,632
Peoples Bank of Oxford            86409            25,290
Citadel Fed. Cred. Union         304380            10,537

                     Total Deposits/Credits       $41,459


                 Deposits/Credits for 1987
       Institution           Account No.      Deposits/Credits

Peoples Bank of Oxford           604366           $ 5,405
Peoples Bank of Oxford            86409            37,451
Citadel Fed. Cred. Union         304380            11,968

                     Total Deposits/Credits       $54,824


                 Deposits/Credits for 1988
       Institution           Account No.      Deposits/Credits

Peoples Bank of Oxford           604366           $13,976
Peoples Bank of Oxford            86409            34,771
Citadel Fed. Cred. Union         304380             9,078

                     Total Deposits/Credits       $57,825
                                - 5 -



                   Deposits/Credits for 1989
         Institution           Account No.     Deposits/Credits

Peoples Bank of Oxford           604366             $ 6,513
Peoples Bank of Oxford            86409              46,481
Citadel Fed. Cred. Union         304380               6,057

                      Total Deposits/Credits        $59,051


                   Deposits/Credits for 1990
         Institution           Account No.      Deposits/Credits

Peoples Bank of Oxford           604366            $15,064
Peoples Bank of Oxford            86409             32,737
Citadel Fed. Cred. Union         304380             14,954

                      Total Deposits/Credits        $62,755


     For 1986, of the above $41,459 in total funds deposited into

or credited to petitioner's accounts, $1,130 constituted interest

income earned on petitioner's deposits.      Petitioner was entitled

to a personal exemption in the amount of $1,080.

     For 1986, petitioner received taxable income in the amount

of $40,379 (total deposits/credits of $41,459 less personal

exemption of $1,080 equals $40,379).      For 1986, petitioner's

total Federal tax liability equaled $16,505, of which $11,545

constituted income taxes and $4,960 constituted self-employment

taxes.

     For 1987, of the above $54,824 in total funds deposited into

or credited to petitioner's accounts, $1,914 constituted interest

income earned on petitioner's deposits, and $1,629 constituted

rental income from the Housing Authority of the City of Chester.
                                - 6 -

Petitioner was entitled to a personal exemption of $1,900 and a

standard deduction of $1,880.

     For 1987, petitioner received taxable income in the amount

of $51,044 (total deposits/credits of $54,824 less personal

exemption of $1,900 and less standard deduction of $1,880 equals

$51,044).   For 1987, petitioner's total Federal tax liability

equaled $20,009, of which $14,622 constituted income taxes and

$5,387 constituted self-employment taxes.

     For 1988, of the above $57,825 in total funds deposited into

or credited to petitioner's accounts, $1,596 constituted interest

income earned on petitioner's deposits, $2,217 constituted rental

income from the Housing Authority of the City of Chester, and

$7,000 constituted a nontaxable transfer between accounts.

Petitioner was entitled to a personal exemption of $1,950 and a

standard deduction of $3,100.

     The following schedule reflects the calculation of

petitioner's 1988 taxable income.


             Petitioner's 1988 Taxable Income
             Item                                Amount

     Total deposits/credits                     $57,825
     Nontaxable transfer                         (7,000)
     Personal exemption                          (1,950)
     Standard deduction                          (3,100)

                          Taxable income        $45,775
                                - 7 -

     For 1988, petitioner's total Federal tax liability equaled

$17,234, of which $11,375 constituted income taxes and $5,859

constituted self-employment taxes.

     For 1989, of the above $59,051 in total funds deposited into

or credited to petitioner's accounts, $395 constituted interest

income earned on petitioner's deposits, and $2,442 constituted

rental income from the Housing Authority of the City of Chester.

For 1989, petitioner also received $1,164 in interest income that

was not deposited into or credited to the above accounts.

Petitioner was entitled to a personal exemption of $2,000 and a

standard deduction of $3,200.

     The following schedule reflects the calculation of

petitioner's 1989 taxable income.


             Petitioner's 1989 Taxable Income
             Item                             Amount

     Total deposits/credits                  $59,051
     Interest income                           1,164
     Personal exemption                       (2,000)
     Standard deduction                       (3,200)

                         Taxable income      $55,015

     For 1989, petitioner's total Federal tax liability equaled

$20,522, of which $14,272 constituted income taxes and $6,250

constituted self-employment taxes.

     For 1990, of the above $62,755 in total funds deposited into

or credited to petitioner's bank accounts, $371 constituted
                              - 8 -

interest income earned on petitioner's deposits, $3,490

constituted taxable Social Security benefits, $2,486 constituted

rental income from the Housing Authority of the City of Chester,

$11,004 constituted nontaxable transfers between petitioner's

accounts, and $3,490 constituted nontaxable Social Security

benefits.

     Also for 1990, petitioner received $2,639 in interest income

that was not deposited into or credited to his accounts.

Petitioner was entitled to a deduction of $2,961 for one-half of

his self-employment tax liability, a personal exemption of

$2,050, and a standard deduction of $3,375.

     The following schedule reflects the calculation of

petitioner's 1990 taxable income.


             Petitioner's 1990 Taxable Income
                   Item                       Amount

     Total deposits/credits                   $62,755
     Interest income                            2,639
     Nontaxable transfers                     (11,004)
     Nontaxable Social Security income         (3,490)
     One-half self-employment taxes            (2,961)
     Personal exemption                        (2,050)
     Standard deduction                        (3,375)

                         Taxable income       $42,514


     For 1990, petitioner's total Federal tax liability equaled

$15,886, of which $9,964 constituted income taxes, and $5,922

constituted self-employment taxes.

     For 1986 through 1990, petitioner did not have reasonable

cause for failing to file his Federal income tax returns.
                                   - 9 -

       Also for the years in issue, petitioner did not pay any

estimated taxes, and petitioner did not qualify under section

6654(e) for an exception to the statute requiring payment of

estimated taxes.

Discussion

       Summary judgment or partial summary judgment may be granted

if pleadings, answers to interrogatories, admissions, and other

acceptable material show that no genuine issue as to any material

fact exists and that a decision may be entered as a matter of

law.    Rule 121(b).   This Court has held in numerous cases that

deemed admissions alone may support summary adjudication in favor

of respondent in cases involving unreported income.     Frazier v.

Commissioner, 91 T.C. 1, 12-13 (1988); Marshall v. Commissioner,

85 T.C. 267 (1985); Doncaster v. Commissioner, 77 T.C. 334, 337-

338 (1981).

       Where a motion for summary judgment is made and supported as

provided under Rule 121, the opposing party may not rest upon

mere allegations or denials in pleadings, but the opposing party

must set forth specific facts showing that there exists a genuine

issue for trial.    Rule 121(d).

       Where affirmative allegations and requests for admission are

deemed admitted under Rules 37(c) and 90(c), facts underlying the

deemed admissions are conclusively established unless the Court

on motion permits withdrawal or modification of the admissions.
                             - 10 -

See Rule 90(c); Marshall v. Commissioner, supra at 271-273;

Morrison v. Commissioner, 81 T.C. 644, 651 (1983); Doncaster v.

Commissioner, supra at 336-337.

     Respondent argues for the years in issue that the deemed

admissions establish that petitioner received unreported income,

that petitioner is liable for the deficiencies and additions to

tax, and that respondent is entitled to summary judgment as a

matter of law.

     Petitioner opposes respondent's motion for summary judgment

on the grounds that the presumption of correctness should not

attach to respondent's determination of unreported income, that,

without supporting evidence, the deemed admissions fail to prove

that petitioner received unreported income, and that petitioner

was not required to provide respondent with any information

through discovery or otherwise that would aid respondent in

satisfying respondent's burden of proof as the moving party on

the motion for summary judgment.

     We agree with respondent, and we reject petitioner's

arguments as unpersuasive and without merit.

     The deemed admissions in this case are sufficiently factual

to support a summary adjudication in favor of respondent.   The

admitted facts establish that petitioner received unreported

income during the years in issue in the amounts determined by

respondent, that petitioner, without reasonable cause, failed to
                               - 11 -

file Federal income tax returns, and that petitioner failed to

pay estimated taxes.    Petitioner has offered no credible facts

that contradict the deemed admissions.

     Petitioner's argument that he may ignore respondent's

discovery requests where respondent bears the burden of proof on

an issue lacks merit.    Under Rule 70(b), nonprivileged

information should be provided in discovery if the information is

reasonably calculated to lead to discovery of admissible

evidence.   Who bears the burden of proof on an issue has no

effect on the obligation to comply with appropriate discovery

requests.   Rule 70(b); Piscatelli v. Commissioner, 64 T.C. 424,

426 (1975).

     For the reasons stated above, we conclude that factual

allegations and admissions that were deemed admitted under Rules

37(c) and 90(c) establish that petitioner received unreported

income during the years in issue, and we have found that

petitioner is liable for deficiencies and additions to tax as

determined by respondent.    Accordingly, we conclude that no

factual matter remains in dispute, and we grant respondent's

motion for summary judgment as a matter of law.


                                          An appropriate order

                                     and decision for respondent

                                     will be entered.
- 12 -
