T.C. Memo. 2000-258
UNITED STATES TAX COURT
PATRICIA R. CARPENTIER, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 2430-96. Filed August 16, 2000.
Douglas D. Potratz, for petitioner.
Ralph W. Jones, for respondent.
MEMORANDUM OPINION
ARMEN, Special Trial Judge: This matter is before the Court
on respondent's Motion for Summary Judgment filed pursuant to
Rule 121(a).1 As explained in detail below, we will grant
1
All Rule references to the Tax Court Rules of Practice
and Procedure.
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respondent partial summary judgment with respect to all matters
deemed admitted as a consequence of petitioner's failure to
respond to respondent's Second Request for Admissions and
petitioner's failure to file a reply to respondent's Amendment to
Answer.
Background
On November 6, 1995, respondent issued notices of deficiency
to Patricia R. Carpentier (petitioner) determining deficiencies
in and additions to her Federal income taxes for 1989, 1990,
1991, 1992, and 1993. Respondent determined that petitioner
failed to file tax returns for the years in issue, failed to
report various items of income (including interest, dividends,
rents, capital gains, and a tax refund), and failed to pay
estimated taxes. Petitioner filed a timely petition for
redetermination with the Court.
On October 22, 1996, Kevin O'Hara filed an entry of
appearance on behalf of petitioner. On March 4, 1997, Mr. O'Hara
filed a motion to withdraw from the case, citing petitioner's
interference in his efforts to settle the case. The Court
granted Mr. O'Hara's motion to withdraw.
On April 3, 1997, Timothy P. Peabody filed an entry of
appearance on behalf of petitioner.
On August 31, 1999, respondent filed a Second Request for
Admissions requesting that petitioner admit the following:
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a. During the year 1989 you sold securities resulting
in a net capital loss in the aggregate amount of
$14,437.00.
b. During the year 1990 you sold securities resulting
in a net capital loss in the aggregate amount of
$34,623.00.
c. During the year 1992, you did not have any capital
gains or losses.
d. During the year 1993 you sold securities resulting
in a net capital loss in the aggregate amount of
$17,588.00.
e. During the year 1989 you received taxable interest
income in the amount of $23,046.00.
f. During the year 1990 you received taxable interest
income in the amount of $24,421.00.
g. During the year 1991 you received taxable interest
income in the amount of $17,156.00.
h. During the year 1992 you received taxable interest
income in the amount of $9,769.00.
i. During the year 1993 you received taxable interest
income in the amount of $6,025.00.
j. During the year 1989 you received taxable dividend
income in the amount of $4,468.00.
k. During the year 1990 you received taxable dividend
income in the amount of $1,102.00.
l. During the year 1991 you received taxable dividend
income in the amount of $552.00.
m. During the year 1992 you received taxable dividend
income in the amount of $2,674.00.
n. During the year 1993 you received taxable dividend
income in the amount of $977.00.
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o. During the year 1989 you received an income tax
refund from the State of California in the amount of
$4,577.00. The refund is includable in your taxable
income for 1989.
p. During the year 1991 you received taxable Form K-1
distribution(s) in the amount of $3,798.00.
q. During the year 1992 you received taxable Form K-1
distribution(s) in the amount of $1,939.00.
r. During the year 1993 you received taxable Form K-1
distribution(s) in the amount of ($69.00).
s. During the year 1989 you received taxable ground
rent income in the amount of $75,000.00.
t. During the year 1990 you received taxable ground
rent income in the amount of $75,000.00.
u. During the year 1991 you received taxable ground
rent income in the amount of $81,115.89.
v. During the year 1992 you received taxable ground
rent income in the amount of $75,891.62.
w. During the year 1993 you received taxable ground
rent income in the amount of $77,910.94.
x. Your filing status for the taxable year 1989 is
single with one exemption.
y. Your filing status for the taxable year 1990 is
single with one exemption.
z. Your filing status for the taxable year 1991 is
single with one exemption.
aa. Your filing status for the taxable year 1992 is
single with one exemption.
ab. Your filing status for the taxable year 1993 is
single with one exemption.
ac. You failed to file an income tax return for the
taxable year 1989.
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ad. You failed to file an income tax return for the
taxable year 1990.
ae. You failed to file an income tax return for the
taxable year 1991.
af. You failed to file an income tax return for the
taxable year 1992.
ag. You failed to file an income tax return for the
taxable year 1993.
ah. Your failure to file an income tax return for the
taxable year 1989 was not due to reasonable cause.
ai. Your failure to file an income tax return for the
taxable year 1990 was not due to reasonable cause.
aj. Your failure to file an income tax return for the
taxable year 1991 was not due to reasonable cause.
ak. Your failure to file an income tax return for the
taxable year 1992 was not due to reasonable cause.
al. Your failure to file an income tax return for the
taxable year 1993 was not due to reasonable cause.
am. You failed to pay estimated tax for the taxable
year 1989.
an. You failed to pay estimated tax for the taxable
year 1990.
ao. You failed to pay estimated tax for the taxable
year 1991.
ap. You failed to pay estimated tax for the taxable
year 1992.
aq. You failed to pay estimated tax for the taxable
year 1993.
Paragraphs a., b., c., and d. of respondent's Second Request
for Admissions, as quoted above, represent concessions by
respondent that, contrary to respondent's determinations in the
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notices of deficiency, petitioner did not realize capital gains
during the taxable years 1989, 1990, 1992, and 1993. Respondent
conceded that petitioner either incurred capital losses or had no
capital gains during those years.
Petitioner failed to file a response to respondent's Second
Request for Admissions. As a consequence, the matters quoted
above were deemed admitted pursuant to Rule 90(c). See
Marshall v. Commissioner, 85 T.C. 267, 272 (1985); Freedson v.
Commissioner, 65 T.C. 333 (1975), affd. 565 F.2d 954 (5th Cir.
1978).
On August 31, 1999, respondent filed a Motion for Leave to
File an Amendment to Answer and lodged an Amendment to Answer
with the Court. On October 1, 1999, the Court granted
respondent's Motion for Leave and filed respondent's Amendment to
Answer. The Amendment to Answer included affirmative allegations
that petitioner had received income in the form of ground rents
during the years in issue as follows:
a. During each of the years 1989 through 1993,
petitioner owned an interest in certain real estate
that was managed in her behalf by Charles Dunn Company.
b. Petitioner was entitled to receive ground
rents from tenants leasing the real estate during each
of the years 1989 through 1993.
c. Charles Dunn Company collected the ground
rents from the tenants. After subtracting amounts paid
for the maintenance of the property and its management
fee, Charles Dunn Company paid net amounts to
petitioner in each of the years 1989 through 1993.
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d. Petitioner received rents from the real estate
managed by Charles Dunn Company for 1989 through 1993
in the respective amounts of $75,000.00, $75,000.00,
$81,115.89, $75,891.62 and $77,910.94.
e. Petitioner received rents from the real estate
in amounts greater than determined in the notices of
deficiency issued to the petitioner, in the respective
amounts of $34,800.00, $34,800.00, $40,915.89,
$35,691.62 and $37,710.94.
f. Because of concessions by respondent with
regard to the capital gains income received by
petitioner in the years in question, the increased
income will not result in deficiencies greater than the
amounts determined by respondent in the notices of
deficiency.
Petitioner failed to file a reply to respondent's Amendment
to Answer.
On December 13, 1999, respondent filed a motion pursuant to
Rule 37(c) requesting that all undenied allegations set forth in
respondent's Amendment to Answer be deemed admitted. Although
petitioner was notified of respondent's motion, petitioner failed
to file either a response to the motion or a reply to
respondent's Amendment to Answer. On January 10, 2000, the Court
granted respondent's Rule 37(c) motion.
On February 1, 2000, Mr. Peabody filed a motion to withdraw
from the case, citing petitioner's failure to communicate with
him. The Court granted Mr. Peabody's motion on March 3, 2000.
Prior thereto, on February 24, 2000, Douglas D. Potratz filed an
entry of appearance on behalf of petitioner. Mr. Potratz is
petitioner’s current counsel.
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As indicated, respondent filed a Motion for Summary
Judgment. Respondent contends that petitioner's dilatory conduct
in this litigation, considered in conjunction with the matters
that petitioner is deemed to have admitted pursuant to Rules
37(c) and 90(c), justifies entry of summary judgment in
respondent's favor.
Petitioner filed an opposition to respondent's motion,
blaming Mr. Peabody for failing to respond to respondent's Second
Request for Admissions and Amendment to Answer. Petitioner
further asserts that respondent's motion should be denied insofar
as petitioner intends to show that she is entitled to deductions
for real estate taxes and other miscellaneous expenses incurred
during the years in issue.
This matter was called for hearing at the Court's motions
session in Washington, D.C. Counsel for respondent appeared at
the hearing and offered argument in support of respondent's
motion. Although petitioner did not attend the hearing, she did
file a written statement with the Court pursuant to Rule 50(c).
Discussion
Summary judgment is intended to expedite litigation and avoid
unnecessary and expensive trials. See Florida Peach Corp. v.
Commissioner, 90 T.C. 678, 681 (1988). Summary judgment may be
granted with respect to all or any part of the legal issues in
controversy "if the pleadings, answers to interrogatories,
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depositions, admissions, and any other acceptable materials,
together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that a decision may be
rendered as a matter of law." Rule 121(b); Sundstrand Corp. v.
Commissioner, 98 T.C. 518, 520 (1992), affd. 17 F.3d 965 (7th
Cir. 1994); Zaentz v. Commissioner, 90 T.C. 753, 754 (1988);
Naftel v. Commissioner, 85 T.C. 527, 529 (1985). The moving
party bears the burden of proving that there is no genuine issue
of material fact, and factual inferences will be read in a manner
most favorable to the party opposing summary judgment. See
Dahlstrom v. Commissioner, 85 T.C. 812, 821 (1985); Jacklin v.
Commissioner, 79 T.C. 340, 344 (1982).
As previously discussed, petitioner is deemed to have
admitted the various matters set forth in respondent's Second
Request for Admissions and respondent's Amendment to Answer.
There is no dispute as to any material fact as to the matters set
forth therein. The allegations deemed admitted, quoted above in
their entirety, establish the nature and amount of various items
of income that petitioner failed to report during the years in
issue. The allegations deemed admitted also establish that
petitioner is liable for the additions to tax determined in the
notices of deficiency.
Petitioner opposes respondent's Motion for Summary Judgment
on the ground that she is entitled to deductions for real estate
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taxes and other miscellaneous expenses incurred during the years
in issue. Respondent's Second Request for Admissions and
respondent's Amendment to Answer are silent with respect to the
nature and amount of the deductions to which petitioner may be
entitled for the years in issue.
Under the circumstances, we will grant respondent partial
summary judgment in that petitioner will be precluded from
contesting the matters set forth in respondent's Second Request
for Admissions and respondent's Amendment to Answer. However, we
hold that respondent is not entitled to full summary judgment
insofar as material issues of fact remain in dispute with respect
to petitioner's entitlement to various deductions for the years
in issue. Any trial in this case will therefore be limited to
the issue of the nature and amount of petitioner's deductions for
the years in issue.
To reflect the foregoing,
An order granting respondent
partial summary judgment will be
issued.