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referred to in Rule 121(b), include those deemed admitted under
Rule 90(c). See, e.g., Marshall v. Commissioner, 85 T.C. 267,
272 (1985). Respondent can rely on a deemed admission of
negligence to show that there is no genuine issue as to any
material fact and that the taxpayer was negligent as a matter of
law. See, e.g., Battikhi v. Commissioner, T.C. Memo. 1998-208;
McIlvane v. Commissioner, T.C. Memo. 1994-104. We have here,
however, more than conclusory deemed admissions of negligence.
By the deemed admissions, petitioners are also deemed to admit
numerous additional facts that, when taken together, establish
that each failed to exercise the due care of a reasonable and
ordinarily prudent person under like circumstances. For example,
each petitioner is deemed to admit that the Trusts are shams,
created primarily for income tax purposes. Petitioners assigned
no error to respondent’s determination of a penalty or set forth
any facts contradicting respondent’s grounds. We are satisfied
that all of the underpayments of tax here in question are
attributable to negligence, and so find.
Moreover, by the deemed admissions, petitioners are deemed
to admit to copies of their 1995 income tax returns. We have
examined those copies and, based on the deficiencies in tax
determined by respondent, which we will sustain, we find that all
of the underpayments of tax here in question are attributable to
substantial understatements of tax.
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