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have not only failed to carry their burden, but they have
defaulted within the meaning of Rule 123(a).
Pursuant to Rule 123(a), we may hold any party in default
when that “party has failed to plead or otherwise proceed as
provided by these Rules or as required by the Court”, and
“Thereafter the Court may enter a decision against the defaulting
party”. The action or inaction of a taxpayer that constitutes
sufficient grounds to apply Rule 123(a) is a matter within our
discretion, and we have consistently given Rule 123 broad
applicability. See, e.g., Smith v. Commissioner, 91 T.C. 1049,
1056 (1988) (default where taxpayer failed to communicate with
the Court, to appear at trial, to participate in preparation of
case for trial, and to comply with the requirements of Rule 91(a)
with regard to preparation of a stipulation of facts), affd. 926
F.2d 1470 (6th Cir. 1991); Stringer v. Commissioner, 84 T.C. 693,
2(...continued)
Appeals for the Third Circuit in regard to respondent’s
determination that the Basiles failed to report income. Golsen
v. Commissioner, 54 T.C. 742 (1970), affd. 445 F.2d 985 (10th
Cir. 1971). Because the facts alleged by respondent in his
answer to the Basiles’ petition and the deemed admissions provide
sufficient evidence linking the Basiles to the unreported income,
the presumption of correctness applies to respondent’s
determination, and petitioners bear the burden of proof that
respondent’s determination is erroneous. See Bosurgi v.
Commissioner, 87 T.C. 1403, 1409 (1986) (“The entry of a default
has the effect of admitting all well-pleaded facts in
respondent’s answer, and a default judgment must be supported by
respondent’s well-pleaded facts.”); Smith v. Commissioner, 91
T.C. 1049, 1057 (1988) (The establishment of respondent's
well-pleaded facts through a default is no different than
establishing such facts through deemed admissions), affd. 926
F.2d 1470 (6th Cir. 1991).
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