Carl C. Poston III and Sherea A. Poston - Page 4




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          (8) fraudulently and with intent to evade tax understated their             
          taxable income in the amounts of $54,565, $137,811, $96,049,                
          $135,050, $284,935, $301,132, and $241,608 for the tax years 1987           
          through 1993, respectively; and (9) fraudulently understated and            
          failed to pay their income tax liabilities in the amounts of                
          $9,921, $36,492, $13,488, $28,619, $55,391, $40,029, and $87,539            
          for the tax years 1987 through 1993, respectively.                          
               Petitioners failed to file a reply to respondent's answer              
          within the time permitted by Rule 37(a).  Respondent moved,                 
          pursuant to Rule 37(c), for entry of an order that the undenied             
          allegations in the answer be deemed admitted.  The Court gave               
          petitioners notice of respondent's motion and instructed                    
          petitioners to file a reply as required by Rule 37(a) and (b).              
          The Court's notice was returned to the Court marked "Unclaimed".            
               Petitioners did not respond to respondent's motion.                    
          Accordingly, the Court granted respondent's motion and deemed               
          admitted the undenied affirmative allegations of fact set forth             
          in respondent's answer.                                                     
               Respondent subsequently filed a Motion for Partial Summary             
          Judgment.  Respondent contends that the allegations in the answer           
          that petitioners are deemed to have admitted provide a basis for            
          entry of partial summary judgment sustaining respondent's                   
          determination that petitioners are liable for additions to tax              
          for fraud for the years in issue.                                           





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