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About 3 weeks after the reply was filed, the instant case
was noticed for trial. Under Rule 37(c),5 if a reply is filed,
then affirmative allegations in the answer that are not expressly
denied are deemed admitted. About 7 weeks after the instant case
was noticed for trial, respondent filed a Motion for Summary
Judgment based on the deemed admissions.6 Petitioners filed a
Motion for Leave to File an Amended Reply and a response to
respondent’s summary judgment motion.
Petitioners concede that Anthony is collaterally estopped
from denying liability for fraud additions to tax, but contend
that Anthony is not estopped from contesting the amounts of the
5 Rule 37(c) provides, in pertinent part, as follows:
RULE 37. REPLY
* * * * * * *
(c) Effect of Reply or Failure Thereof: Where a
reply is filed, every affirmative allegation set out in
the answer and not expressly admitted or denied in the
reply shall be deemed to be admitted. Where a reply is
not filed, the affirmative allegations in the answer
will be deemed denied unless the Commissioner, within
45 days after expiration of the time for filing the
reply, files a motion that specified allegations in the
answer be deemed admitted. * * *
6 In this motion, respondent states that respondent
determined in the notice of deficiency that there was a
“substantial understatement addition to tax of $6,818.00 for the
tax year ended December 31, 1988.” In the notice of deficiency
respondent actually determined the amount of this addition to tax
is $2,273, about 25 percent of the determined deficiency of
$9,090. We regard respondent’s statement on motion to be a
typographical error and not a claim under sec. 6214(a) for an
increased deficiency or for an increased addition to tax.
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