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(ac), above, were never paid or incurred by petitioner.
Finally, in subparagraphs (af) through (am), respondent
asserted that the omission of income and erroneous deductions
were due to fraud, and that petitioner understated its tax
liabilities for its taxable years 1988 and 1989 with the intent
to evade tax.
Petitioner did not file a reply. Respondent filed a motion
under Rule 37(c) asking the Court to deem admitted the
affirmative allegations set forth in paragraph 6 of his answer.
On October 27, 1998, petitioner was served with that motion
together with notice that if petitioner filed its reply as
required by Rule 37(a) and (b) on or before November 20, 1998,
respondent's motion would be denied; however, if petitioner did
not file a reply as directed, the Court would grant respondent's
motion and deem admitted the affirmative allegations in the
answer.
Petitioner did not respond to respondent's motion or the
Court's notice. Petitioner never filed its reply. Accordingly,
on November 27, 1998, the Court granted respondent's Rule 37(c)
motion and deemed admitted the affirmative undenied allegations
of respondent's Answer. On November 30, 1998, a copy of that
order was served upon petitioner.
On October 19, 1999, the Court served its notice setting
this case for trial on March 20, 2000, at a trial session of this
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