                  T.C. Memo. 1998-28



                UNITED STATES TAX COURT



            RAYMOND E. ROTH, Petitioner v.
     COMMISSIONER OF INTERNAL REVENUE, Respondent



Docket No. 21823-96.                   Filed January 22, 1998.




     Respondent moved under Rule 37(c), Tax Court Rules of
Practice and Procedure, that the undenied allegations in the
answer be deemed admitted. Petitioner did not avail himself
of the opportunity to file a reply or otherwise object to
the motion. We granted respondent’s Rule 37(c) motion.
Respondent moved for judgment on the pleadings under Rule
120, Tax Court Rules of Practice and Procedure.

     Held: Respondent’s motion for judgment on the
pleadings is granted; decision will be entered for
respondent as to all the deficiencies and additions to tax
determined in the notices of deficiency.

Raymond E. Roth, pro se.

Janet J. Johnson, for respondent.
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                           MEMORANDUM OPINION

       CHABOT, Judge:    This matter is before us on respondent’s

motion for judgment on the pleadings under Rule 120.1       Respondent

determined deficiencies in Federal individual income tax and

additions to tax under sections 6651(f)2 (fraud), 6654

(underpayment of estimated tax), and 6663 (fraud) against

petitioner as follows:

                                          Additions to Tax
Year        Deficiency       Sec. 6651(f)    Sec. 6654     Sec. 6663

1989         $21,344           $15,474          $112          --
1990          11,065               --             --        $8,299
1991           6,882               --             --         5,162
1992          11,934              8,652          336          --
                                1
1993          11,597              8,408          486          --
1994          14,183              6,170          662          --

1
   The cover letter and schedule 1 of the notice of deficiency
show this as a $8,408 addition to tax under sec. 6663. Schedule
7 of the notice of deficiency shows this as a $8,408 addition to
tax under sec. 6651(f). The matter is clarified in respondent’s
answer as being under sec. 6651(f). Petitioner has not raised
any concern about this matter. Taking into account the record as
a whole, we hold that respondent determined that the $8,408
addition to tax for 1993 was under sec. 6651(f) and not under
sec. 6663. Bokum v. Commissioner, 94 T.C. 126, 127 n.2 (1990),
affd. 992 F.2d 1132 (11th Cir. 1993); Saint Paul Bottling Co. v.
Commissioner, 34 T.C. 1137 (1960).

       1
          Unless indicated otherwise, all Rule references are to
the Tax Court Rules of Practice and Procedure.
       2
          Unless indicated otherwise, all section references are
to sections of the Internal Revenue Code of 1986 as in effect for
the years in issue.
                               - 3 -




     The issues for decision are (1) whether there are any

genuine issues as to material facts and, if there are no such

issues, then (2) whether respondent is entitled to judgment as a

matter of law on the deficiencies and additions to tax.

Background--Procedure

     Petitioner invoked this Court’s jurisdiction by filing a

timely petition from the two notices of deficiency that embodied

respondent’s determinations described supra.    Respondent filed an

answer to the petition, including specific allegations with

regard to the fraud determinations.    Petitioner did not file a

reply to this answer.   Respondent filed a motion pursuant to Rule

37(c) that undenied allegations in the answer be deemed admitted.

The Court issued an order to petitioner, advising him of the

filing of respondent’s motion under Rule 37(c) and directing

petitioner to file a reply to respondent’s answer within 20 days

of the order.   Petitioner failed to file a reply to respondent’s

answer or otherwise respond to the Court’s order.    Consequently,

we granted respondent’s Rule 37(c) motion, and the undenied

allegations set forth in respondent’s answer were deemed to be

admitted.   Gilday v. Commissioner, 62 T.C. 260, 261-262 (1974);

see Gordon v. Commissioner, 73 T.C. 736, 739-740 (1980).

     On May 20, 1997, the Court served the parties with notice of

trial in St. Louis, Mo., the location designated by petitioner.
                               - 4 -


On August 22, 1997, respondent filed the instant motion for

judgment on the pleadings.   After several unsuccessful informal

attempts to contact petitioner to arrange for a telephone

conference to discuss the instant motion,3 the Court struck the

case from the October 27, 1997, St. Louis trial session and

established a briefing schedule on the instant motion.

Petitioner has not filed any brief or otherwise responded to the

instant motion.

     Our findings are based entirely on those matters that are

admitted or deemed admitted in the pleadings.

Background--Facts

     When the petition was filed in the instant case, petitioner

resided in Belleville, Illinois.

     During each of the years 1989, 1990, 1991, 1992, 1993, and

1994, petitioner was engaged in the business of publishing a

magazine entitled “Southern Illinois Prep Sports” (hereinafter

sometimes referred to as SIPS), featuring local high school

athletes.   Petitioner conducted this business as a sole

proprietorship doing business as “Southern Illinois Prep Sports”.

In each of the years 1990, 1991, 1992, 1993, and 1994, petitioner

published two editions of SIPS: a football issue in the fall and

     3
          At some point after the notice of trial was served and
before respondent filed the instant motion for judgment on the
pleadings, petitioner apparently moved from the address listed in
the petition. Petitioner has not communicated with the Court,
formally or informally, since then.
                                - 5 -


a basketball issue in the winter.    In 1989, he published three

editions--fall, winter, and spring.

     During the period 1989, through 1994, petitioner sold

advertising in SIPS to local businesses at the following rates:

$55 for a business card-sized advertisement; $85 for one-sixth

page; $120 for one-quarter page; $200 for one-half page; and $360

for a full page.

     During 1990 and 1991, petitioner derived revenue in the

amounts of $50,710 and $44,125, respectively, from selling

advertising in SIPS.    Of the amounts so derived, $25,140 and

$20,895 were not reported on petitioner’s income tax returns for

1990 and 1991, respectively.    Petitioner understated his taxable

income on his tax returns for 1990 and 1991 in the amounts of

$30,385 and $26,670, respectively.      Petitioner understated his

income tax liabilities on his tax returns for 1990 and 1991 in

the amounts of $11,065 and $6,882, respectively.

     Petitioner did not file income tax returns for 1989, 1992,

1993, and 1994.    During 1989, 1992, 1993, and 1994, petitioner

derived revenue in the amounts of $77,175, $52,485, $53,575, and

$59,780, respectively, from selling advertising in SIPS.

Petitioner failed to report taxable income for 1989, 1992, 1993,

and 1994, in the amounts of $57,505, $31,885, $30,477, and

$36,551, respectively.    As a result of not filing income tax

returns for 1989, 1992, 1993, and 1994, petitioner understated
                                - 6 -


his income tax liabilities for those years in the amounts of

$21,344, $11,934, $11,597, and $14,183, respectively.

     Petitioner failed to produce any records or other

information with respect to these sales of advertising, to

respondent in connection with the examination of his tax returns

for 1990 and 1991, and in connection with the examination of

petitioner’s 1989, 1992, 1993, and 1994 income tax liabilities.

Discussion

     (1) Judgment on the pleadings

     A motion for judgment on the pleadings will be granted only

if the pleadings do not raise a genuine issue as to a material

fact and the moving party is entitled to a judgment as a matter

of law.   DuPont v. Commissioner, 74 T.C. 498, 504 (1980); Anthony

v. Commissioner, 66 T.C. 367, 368, (1976), affd. without

published opinion 566 F.2d 1168 (3d Cir. 1977).

     (2) Genuine issue as to material fact

     In the instant case, there are no genuine issues as to the

material facts found supra, under Background--Facts, these

matters having been deemed admitted by order of the Court.

     Petitioner is deemed to have admitted that he understated

his tax liabilities by specified amounts for each of the 6 years

in issue.    This “bottom line” admission eliminates any need to

consider matters which might otherwise affect tax liability, such

as deductions, credits, or tax filing status.
                                - 7 -


       Because petitioner has failed to plead that any addition to

tax should be reduced on account of prepayment credits, or that

any fraud addition to tax should be reduced on account of some

part of the underpayment’s not being due to fraud, or that any

addition to tax should be reduced on account of any matter other

than the amount of the underpayment, there are no genuine issues

as to material facts affecting the amounts of any additions to

tax.

       (3) Judgment as a matter of law

       Respondent is entitled to judgment as a matter of law with

respect to the deficiencies and the additions to tax under

section 6654.

       As to the fraud additions to tax, in order to carry the

burden of proof for a year, respondent must prove two elements,

as follows: (1) That petitioner has an underpayment of tax for

that year, and (2) that some part of that underpayment is due to

fraud.    Sec. 7454(a); Rule 142(b); e.g., Carter v. Campbell, 264

F.2d 930, 936 (5th Cir. 1959); Stone v. Commissioner, 56 T.C.

213, 220 (1971); Otsuki v. Commissioner, 53 T.C. 96, 105, 106

(1969).    Each of these elements must be proven by clear and

convincing evidence.    DiLeo v. Commissioner, 96 T.C. 858, 873

(1991), affd. 959 F.2d 16 (2d Cir. 1992); Parks v. Commissioner,

94 T.C. 654, 663-664 (1990); Hebrank v. Commissioner, 81 T.C.

640, 642 (1983).
                               - 8 -


     For this purpose, respondent need not prove the precise

amount of the underpayment resulting from fraud, but only that

there is some underpayment and that some part of it is

attributable to fraud.   E.g., Lee v. United States, 466 F.2d 11,

16-17 (5th Cir. 1972); Plunkett v. Commissioner, 465 F.2d 299,

303 (7th Cir. 1972), affg. T.C. Memo. 1970-274.   In carrying this

burden, respondent may not rely on petitioner’s failure to meet

his burden of proving error in respondent’s determinations as to

the deficiencies.   E.g., Petzoldt v. Commissioner, 92 T.C. 661,

700 (1989); Habersham-Bey v. Commissioner, 78 T.C. 304, 312

(1982), and cases cited therein.

     Where fraud is determined for each of several years,

respondent’s burden applies separately for each of the years.

Drieborg v. Commissioner, 225 F.2d 216, 219-220 (6th Cir. 1955),

affg. in part and revg. in part a Memorandum Opinion of this

Court dated Feb. 24, 1954; Estate of Stein v. Commissioner, 25

T.C. 940, 959-963 (1956), affd. sub nom. Levine v. Commissioner,

250 F.2d 798 (2d Cir. 1958).   A mere understatement of income

does not establish fraud.   However, a pattern of consistent

underreporting of income for a number of years is strong evidence

of fraud.   Estate of Mazzoni v. Commissioner, 451 F.2d 197, 202

(3d Cir. 1971), affg. T.C. Memos. 1970-144 and 1970-37; Adler v.

Commissioner, 422 F.2d 63, 66 (6th Cir. 1970), affg. T.C. Memo.

1968-100; Otsuki v. Commissioner, 53 T.C. at 108.
                               - 9 -


     The issue of fraud poses a factual question that is to be

decided on an examination of all the evidence in the record.

Plunkett v. Commissioner, 465 F.2d at 303; Mensik v.

Commissioner, 328 F.2d 147, 150 (7th Cir. 1964), affg. 37 T.C.

703 (1962); Stone v. Commissioner, 56 T.C. at 224.

     In order to establish fraud as to petitioner, respondent

must show that petitioner intended to evade taxes, which he knew

or believed were owed, by conduct intended to conceal, mislead,

or otherwise prevent the collection of taxes.   E.g., Webb v.

Commissioner, 394 F.2d 366, 377 (5th Cir. 1968), affg. T.C. Memo.

1966-81; Powell v. Granquist, 252 F.2d 56, 60 (9th Cir. 1958);

Danenberg v. Commissioner, 73 T.C. 370, 393 (1979); McGee v.

Commissioner, 61 T.C. 249, 256-257 (1973), affd. 519 F.2d 1121

(5th Cir. 1975).   This intent may be inferred from circumstantial

evidence, Powell v. Granquist, 252 F.2d at 61; Gajewski v.

Commissioner, 67 T.C. 181, 200 (1976), affd. without published

opinion 578 F.2d 1383 (8th Cir. 1978), including the

implausibility of petitioner’s explanations, Bradford v.

Commissioner, 796 F.2d 303, 307 (9th Cir. 1986) (and cases

therein cited), affg. T.C. Memo. 1984-601; Boyett v.

Commissioner, 204 F.2d 205, 208 (5th Cir. 1953), affg. a

Memorandum Opinion of this Court dated Mar. 14, 1951.

     Respondent has proven by clear and convincing evidence that

there was an underpayment of tax for each of the years in issue.
                              - 10 -


     Respondent has proven by clear and convincing evidence that

for 6 consecutive years petitioner received advertising revenue

in amounts ranging from $44,125 to $77,175 per year, and

averaging more than $56,000 per year.   For 4 of these years

petitioner omitted all of these receipts, for the other 2 years

petitioner omitted about half of these receipts.   For these 6

years petitioner omitted taxable income in amounts ranging from

$26,670 to $57,505 per year, and averaging more than $35,000 per

year.   This pattern of consistent underreporting of income is

strong evidence of fraudulent omissions of income, which resulted

in underpayments of tax for each of the 6 years in issue.

     When the foregoing is combined with petitioner’s failure to

produce to respondent any records or other information with

respect to sales of advertising, in connection with respondent’s

examination of petitioner’s income tax liabilities for the 6

years in issue, we conclude that respondent has proven by clear

and convincing evidence that a part or all of the underpayment

for each of the years in issue is due to petitioner’s fraud.

     Petitioner has not alleged in the pleadings that any part of

the deficiency for any of the years in issue is not due to fraud.

     We hold that respondent’s motion for judgment on the

pleadings should be granted as to both the determined

deficiencies and the additions to tax under sections 6651(f),

6654, and 6663.   To reflect this,
- 11 -


          An appropriate order

     granting respondent’s motion

     for judgment on the pleadings

     will be issued; decision will

     be entered for respondent.
