                         T.C. Memo. 1995-565



                      UNITED STATES TAX COURT



        DAVID CARKHUFF AND TONJA CARKHUFF, Petitioners v.
            COMMISSIONER OF INTERNAL REVENUE, Respondent


     Docket No. 19773-94.              Filed November 28, 1995.


     David Carkhuff and Tonja Carkhuff, pro sese.

     Robert E. Cudlip, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION

     PARR, Judge:   This matter is before the Court on

respondent's Motion for Summary Judgment, filed October 6, 1995,

pursuant to Rule 121.1




1
     All Rule references are to the Tax Court Rules of Practice
and Procedure, and all section references are to the Internal
Revenue Code in effect for the taxable years in issue, unless
otherwise indicated.
                                - 2 -

       Respondent determined deficiencies in, an addition to, and

accuracy-related penalties on, petitioners' Federal income tax

for taxable years 1990 and 1991 as follows:

                           Addition to Tax     Accuracy-Related
                                             Penalty
                                Sec.              Sec.
Year        Deficiency          6651(a)           6662(a)1

1990        $7,594              $1,730.75         $1,518.80
1991        44,731                 --              8,946.20
       1
       The first page of the statutory notice of deficiency
mistakenly refers to the accuracy-related penalties determined in
1990 and 1991 as pursuant to sec. 6651; however, the explanation
pages of the notice of deficiency refer to the correct section,
6662(a).

For the reasons discussed below, the Court will grant

respondent's motion.

                           FINDINGS OF FACT

       At the time the petition in this case was filed, petitioners

resided in Concord, California.    Petitioners requested San

Francisco, California, as the place for trial at the time they

filed their petition.

       On September 21, 1994, respondent issued a statutory notice

of deficiency to petitioners for tax years 1990 and 1991.         The

deficiencies at issue are attributable to respondent's

determination that (1) petitioners failed to report gross

receipts; (2) petitioners failed to report a taxable IRA

distribution and are liable for additional tax on an early

distribution from the IRA; (3) petitioners are liable for

additional self-employment tax; (4) petitioners have not
                               - 3 -

substantiated certain cost of goods sold and Schedule C expenses;

and (5) petitioners failed to report earned income credit

recapture.   The addition to tax at issue is attributable to

petitioners' late filing of their 1990 Federal income tax return,

and respondent asserted an accuracy-related penalty under section

6662(a), for tax years 1990 and 1991.

     Petitioners invoked the jurisdiction of this Court by filing

a timely petition for redetermination.    In the petition, the sole

ground for petitioners' disagreement with the adjustments in the

notice of deficiency was that their "TAX RECORDS WERE NOT

AVAILABLE WHEN REQUESTED".   After filing an answer to the

petition, respondent attempted to schedule a conference for the

purpose of discussing the issues in the case.    On March 17, 1995,

in accordance with Branerton Corp. v. Commissioner, 61 T.C. 691

(1974), respondent sent a letter informally requesting

petitioners to provide copies of all documents relevant to the

issues in the case by April 20, 1995.    The letter was sent by

certified mail, return receipt requested, to three different

addresses: petitioners' residence, petitioners' business, and in

care of their representative, A.E. Rheinheimer, Enrolled Agent.

Respondent received the return receipts indicating that

petitioner, Tonja Carkhuff, signed for the letter addressed to

the business address, on March 18, 1995, and for the letter

addressed to the residence, on March 30, 1995.    Furthermore,

respondent received a return receipt indicating that A.E.
                               - 4 -

Rheinheimer signed for the letter addressed to his care, on March

18, 1995.   Respondent has never received a response from

petitioners or their representative.

     On May 23, 1995, respondent served by certified mail, return

receipt requested, upon petitioners, at their residence address,

Respondent's Request for Admissions, Interrogatories, and

Respondent's Request for Production of Documents.   Petitioners

did not file any response to the request for admissions.    In her

request for admissions, respondent requested that petitioners

admit that each of the determinations in the notice of deficency

was correct.   In addition, respondent requested admission that

petitioners' 1990 tax return was filed April 15, 1992, and that

they had no reasonable cause for the late filing.   Petitioners

did not respond to respondent's request for admissions.

     Accordingly, respondent filed a Motion for Summary Judgment

seeking judgment in her favor with respect to all disputed

issues.   Respondent bases her Motion for Summary Judgment on the

matters deemed admitted pursuant to Rule 90(c) (resulting from

petitioners' failure to respond to respondent's request for

admissions).   Petitioners have failed to respond to the pending

motion.

                               OPINION

     Summary judgment is appropriate "if the pleadings, answers

to interrogatories, depositions, admissions, and any other

acceptable materials, together with the affidavits, if any, show
                               - 5 -

that there is no genuine issue as to any material fact and that

decision may be rendered as a matter of law."   Rule 121(b);

Zaentz v. Commissioner, 90 T.C. 753, 754 (1988); Naftel v.

Commissioner, 85 T.C. 527, 529 (1985).   Rule 121(d) states:

     When a motion for summary judgment is made and supported as
     provided in this Rule, an adverse party may not rest upon
     the mere allegations or denials of such party's pleading,
     but such party's response, by affidavits or as otherwise
     provided in this Rule, must set forth specific facts showing
     that there is a genuine issue for trial. If the adverse
     party does not so respond, then a decision, if appropriate,
     may be entered against such party.

See King v. Commissioner, 87 T.C. 1213, 1217 (1986).   The moving

party, however, bears the burden of proving that there is no

genuine issue of material fact, and factual inferences will be

read in a manner favorable to the party opposing summary

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

modified by T.C. Memo. 1991-264, affd. without published opinion

(5th Cir. 1993); Jacklin v. Commissioner, 79 T.C. 340, 344

(1982).

     Pursuant to Rule 90(c), each statement set forth in a

request for admissions served on a party is deemed admitted

unless a response thereto is served upon the requesting party

within 30 days after service of the request.    Alexander v.

Commissioner, 926 F.2d 197, 198-199 (2d Cir. 1991), affg. per

curiam T.C. Memo. 1990-315; Dahlstrom v. Commissioner, supra at

817-818; Freedson v. Commissioner, 65 T.C. 333, 334-336 (1975),

affd. on another issue 565 F.2d 954 (5th Cir. 1978).   Summary
                               - 6 -

judgment is appropriate where the facts deemed admitted pursuant

to Rule 90(c) support a finding that there is no genuine issue as

to any material fact.   Marshall v. Commissioner, 85 T.C. 267

(1985); Morrison v. Commissioner, 81 T.C. 644, 651-652 (1983).

     We agree with respondent that the issues pertaining to

petitioners' liability for the deficiencies and additions to tax

in dispute are ripe for summary adjudication.   In particular,

petitioner is deemed to have admitted each of the factual

allegations set forth in respondent's request for admissions.     We

note that respondent's request for admissions includes a

statement advising petitioners that the allegations set forth

therein would be deemed admitted under Rule 90(c) if not

specifically admitted or denied within 30 days of service of the

request.   Based on the record presented, and particularly

petitioners' failure to communicate with the Court or to

otherwise respond to respondent's motion, we conclude that

petitioners have no intention of pursuing this matter further.

     The deficiencies determined by respondent in this case arise

from petitioners' failure to report gross receipts, failure to

report a taxable IRA distribution, failure to substantiate

certain cost of goods sold and Schedule C expenses, and from

other adjustments, as set forth in the notice of deficiency.     The

factual allegations deemed admitted by petitioners under Rule

90(c) establish that respondent's determinations with respect to

these items are correct.   Having examined all of the materials in
                                - 7 -

the record, including the notice of deficiency, the pleadings,

and the admitted facts, we hold that there is no genuine issue of

material fact with respect to petitioners' liability for the

deficiencies determined by respondent.   Accordingly, respondent

is entitled to summary judgment as to the income tax

deficiencies.

     Respondent also determined that petitioners are liable under

section 6651(a)(1) for an addition to tax for 1990 for failure to

file a tax return.   Section 6651(a)(1) imposes an addition to tax

for failure to file timely a return unless the taxpayer shows

that such failure was due to reasonable cause and not willful

neglect.   The deemed admissions in this case establish that

petitioners failed to file their return for tax year 1990 until

April 15, 1992.    There is nothing in the record to suggest that

petitioners' failure to file was due to reasonable cause and not

willful neglect.   We conclude, therefore, that respondent is

entitled to summary judgment with respect to the addition to tax

for 1990 for failure to file under section 6651(a).    Rapp v.

Commissioner, 774 F.2d 932, 936 (9th Cir. 1985), affg. an Order

of this Court.

     Section 6662(a) and (b) imposes a penalty equal to 20

percent of the portion of the underpayment of taxes attributable

to negligence or disregard of rules or regulations.    "Negligence"

includes any failure to make a reasonable attempt to comply with

applicable provisions of the Internal Revenue Code; "disregard"
                                   - 8 -

includes any careless, reckless, or intentional disregard.            Sec.

6662(c).    The deemed admissions establish that petitioners are

liable for the penalty with regard to the entire underpayment.

The deemed admissions establish that no genuine issue of material

fact exists as to the issue of negligence and, therefore,

respondent is entitled to a decision on this issue as a matter of

law.

       Accordingly, respondent's Motion for Summary Judgment will

be granted as to all issues.

       To reflect the foregoing,

                                           An appropriate order and

                                   decision will be entered granting

                                   respondent's motion for summary

                                   judgment.
