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The issues for decision are: (1) Whether petitioner
received taxable income as determined by respondent for each of
the years in issue; (2) whether petitioner is liable for an
addition to tax for fraud under section 6653(b)1 for each of the
years in issue; (3) whether petitioner is liable for an addition
to tax for substantial understatement of income tax under section
6661 for 1984; and (4) whether petitioner is liable for an
addition to tax for failure to pay estimated tax under section
6654 for 1986.
Prior to trial, the Court granted respondent's motion to
impose sanctions pursuant to Rule 104(c), as a result of
petitioner's failure to obey our order that he respond to
requests for admission. We ordered that the matter contained in
respondent's requests be taken as established for purposes of
this case. Because of the importance of this ruling to the
outcome of this case, we will explain the relevant procedural
history as well as the reasoning behind our imposition of
sanctions.
Procedural Background
From the inception of this case, petitioner demonstrated
that he intended to rely upon frivolous positions. For example,
1Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the taxable years in
issue, and all Rule references are to the Tax Court Rules of
Practice and Procedure.
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