Gilday v. Comm'r of Internal Revenue
| Decision Date | 29 May 1974 |
| Docket Number | Docket No. 1608-73. |
| Citation | 62 T.C. 260 |
| Parties | JOHN ALBERT GILDAY, PETITIONER v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT |
| Court | U.S. Tax Court |
OPINION TEXT STARTS HERE
William H. Newton III, for the respondent.
Upon petitioner's failure to reply, the Court granted respondent's motion under then Rule 18(c) (now Rule 37(c)), Tax Court Rules of Practice, that the affirmative allegations in respondent's answer relative to fraud be deemed admitted. Petitioner failed to appear when the case was called for trial. Respondent moved to dismiss for failure to prosecute with regard to the deficiency in tax, and moved for judgment on the facts deemed admitted with regard to the addition to tax for fraud. Held: Petitioner's return for 1969 was false and fraudulent with intent to evade tax. Decision entered for respondent in the amounts of the deficiency in tax and addition to tax determined in the notice of deficiency. Procedure under new rules of Tax Court in such circumstances discussed.
Respondent determined a deficiency in income tax and addition to tax under section 6653(b), I.R.C. 1954, against petitioner as follows:
+-------------------------------------+
¦ ¦ ¦Addition to tax ¦
+------+------------+-----------------¦
¦Year ¦Deficiency ¦sec. 6653 (b) ¦
+------+------------+-----------------¦
¦1969 ¦$818.01 ¦$409.01 ¦
+-------------------------------------+
Petitioner filed an individual income tax return for the year 1969 with the office of Internal Revenue Service, Jacksonville, Fla. Petitioner resided in Miami, Fla., at the time the petition herein was filed.
Respondent filed his answer to the petition filed herein on May 7, 1973. The answer affirmatively alleged specific facts upon which respondent relied to sustain fraud, the burden of proof of which is placed on respondent by statute. Sec. 7454(a), I.R.C. 1954. Petitioner did not file a reply to respondent's answer, and on August 2, 1973, respondent filed a Motion for Entry of Order that Undenied Allegations in Answer be Deemed Admitted, under then Rule 18(c),1 Tax Court Rules of Practice. Upon due notice of hearing, this Court, on October 3, 1973, entered an order granting respondent's motion.
This case was called for trial from the trial calendar of this Court in Miami, Fla., on May 13, 1974. There was no appearance by or in behalf of petitioner. Respondent thereupon moved that the case be dismissed for lack of prosecution insofar as the deficiency is concerned and that the Court enter decision for respondent in the amount of the deficiency determined in the notice of deficiency. This motion was granted, and decision will be entered for respondent that there is a deficiency in petitioner's income tax for the year 1969 in the amount of $818.01. See sec. 7459(d), I.R.C. 1954.
Respondent also moved for judgment on the fraud issue based on the affirmative allegations of fact contained in respondent's answer, which were deemed admitted by the order of this Court above mentioned pursuant to Rule 37(c). The facts so deemed admitted establish that petitioner claimed dependency exemptions for four children who were living with petitioner's estranged wife and for whom petitioner did not supply more than 50-percent support in 1969; that petitioner gave a false address on his income tax return for 1969; that petitioner erroneously claimed an exemption for his estranged wife, Alice Gilday, on his 1969 return, by filing what purported to be a joint return; and that petitioner forged the signature of his wife on his 1969 return. Alice Gilday filed a separate individual income tax return for the year 1969, claiming a dependency credit for all four children as well as a personal exemption for herself.
Respondent has the burden of proving fraud by clear and convincing evidence. Zelma Curet Miller, 51 T.C. 915 (1969); M. Rea Gano, 19 B.T.A. 518 (1930). We find that the facts deemed admitted satisfy respondent's burden of proving fraud. We find as a fact that the return filed by petitioner was false and fraudulent with intent to evade tax, and that the deficiency was due to fraud....
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