The opinion
T.C. Memo. 1997-548
UNITED STATES TAX COURT
LARRY BROWN, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 13623-96. Filed December 11, 1997.
R moved for partial summary judgment on an issue
informally raised by P during an IRS Appeals Office
conference as to whether the period of limitations for
assessment had expired as a result of R's alleged
failure to honor an election by P's partnership for
treatment under the unified audit provisions of secs.
6221 through 6233, I.R.C. R also moved to impose
sanctions under Rule 104(c), Tax Court Rules of
Practice and Procedure, including dismissal, for P's
ongoing noncompliance with a discovery order of the
Court. P filed oppositions to both of R's motions.
1. Held: R's motion for partial summary judgment
granted. Rule 121(b), Tax Court Rules of Practice and
Procedure.
- 2 -
2. Held, further, R's motion to impose sanctions
granted; this case will be dismissed; and decision will
be entered against P for deficiencies and accuracy-
related penalties under sec. 6662(a), I.R.C., in the
amounts determined by R for the taxable years 1992 and
1993. Rule 104(c)(3), Tax Court Rules of Practice and
Procedure.
Larry Brown, pro se.
William J. Gregg, for respondent.
MEMORANDUM OPINION
NIMS, Judge: This matter is before the Court on (1)
respondent's motion for partial summary judgment under Rule 121;
and (2) respondent's motion to impose sanctions under Rule
104(c), including dismissal of this case.
Unless otherwise indicated, all section references are to
sections of the Internal Revenue Code in effect for the years in
issue, and all Rule references are to the Tax Court Rules of
Practice and Procedure.
Respondent determined the following deficiencies and
accuracy-related penalties with respect to the Federal income tax
of Larry Brown (petitioner) and Elizabeth R. Brown (Elizabeth)
for the taxable years 1992 and 1993:
Penalties
Year Deficiency Sec. 6662(a)
1992 $89,372 $17,874
1993 48,028 9,606
- 3 -
By Order dated October 15, 1996, the Court granted
respondent's Motion to Dismiss for Lack of Jurisdiction as to
Elizabeth R. Brown and to Change Caption on the ground that the
petition as to her was invalid because it was filed during the
automatic bankruptcy stay of 11 U.S.C. section 362(a) (1994).
See McClamma v. Commissioner, 76 T.C. 754 (1981).
The issues for decision are as follows: (1) Whether a valid
notice of deficiency was issued prior to the expiration of the
applicable period of limitations for assessment; and (2) whether
sanctions under section 104(c) should be imposed against
petitioner for his failure to comply with a discovery order of
this Court.
Petitioner resided in Upper Marlboro, Maryland, at the time
he filed his petition.
Background
The background facts related below are taken from the record
and the unobjected to written representations of the respective
parties, except where noted.
Petitioner and Elizabeth filed joint Forms 1040, U.S.
Individual Income Tax Return, for the taxable years 1992 and 1993
on April 20, 1993, and May 2, 1994, respectively.
Petitioner was the sole general partner of Brown's Capital
Properties II limited partnership (Partnership) during the years
in dispute. A review of the Schedules K-1 attached to the Form
1065 filed by the Partnership for taxable year 1992 reveals that
- 4 -
the following natural persons were partners of the Partnership
during that year:
1. Larry and Elizabeth Brown (husband and wife);
2. Barbara S. Jackson;
3. Rufus and Annette Johnson (husband and wife);
4. Irma Green;
5. Martha J. and Eddie E. Huggins (husband and wife);
6. Benjamin and Lauretta Grant (husband and wife); and
7. Jerome and Vernell Richardson (husband and wife).
A review of the Schedules K-1 attached to the Form 1065
filed by the Partnership for taxable year 1993 reveals that the
following natural persons were partners of the Partnership during
that year:
1. Larry Brown;
2. Barbara S. Jackson;
3. Rufus Johnson;
4. Irma Green;
5. Martha J. and Eddie E. Huggins (husband and wife);
6. Benjamin Grant;
7. Jerome Richardson; and
8. Patricia O. Shellmen.
The Tax Matters Partner answered "Yes" in response to the
question in Schedule B, Other Information, line 6 of the 1992
Form 1065 "Does this partnership have any foreign partners?".
However, all of the partners of the Partnership in 1992 checked
"domestic" in response to the question "Is this partner a
domestic or a foreign partner?" on line D of their respective
Schedules K-1. On the 1993 Form 1065 filed by the Partnership,
the Tax Matters Partner answered "No" in response to the question
- 5 -
in Schedule B, Other Information, line 6, "Does this partnership
have any foreign partners?". We conclude that the Partnership
had no foreign partners for either year.
The only partnership items reported on the Forms 1065 filed
in 1992 and 1993 were losses of the Partnership in the amounts of
$359,285.96 and $416,000, respectively.
Respondent issued a notice of deficiency to petitioner and
Elizabeth on March 20, 1996, for their 1992 and 1993 taxable
years. The principal adjustments to income as determined by
respondent in the notice of deficiency represent adjustments to
petitioner's allocable share of income from the Partnership in
1992 and 1993 in the amounts of $293,577 and $107,297,
respectively, and the inclusion in income of certain guaranteed
payments in 1992 and 1993 of $55,286 and $56,000, respectively,
all of which stemmed from respondent's disallowance of losses
attributable to the Partnership for those years during a related
partnership examination. Other adjustments to income were
computational in nature. In addition, respondent determined that
petitioner and Elizabeth were liable for accuracy-related
penalties for 1992 and 1993 pursuant to section 6662(a).
Petitioner filed his petition on June 27, 1996. On December
19, 1996, the Court issued a Notice Setting Case for Trial in
Washington, D.C. on May 19, 1997; attached thereto was a Standing
Pre-trial Order. The Notice states "YOUR FAILURE TO COOPERATE
MAY * * * RESULT IN DISMISSAL OF THE CASE AND ENTRY OF DECISION
- 6 -
AGAINST YOU." The Pre-trial Order similarly states that "If any
unexcused failure to comply with this Order adversely affects the
timing or conduct of the trial, the Court may impose appropriate
sanctions, including dismissal, to prevent prejudice to the other
party or imposition on the Court."
On February 6, 1997, respondent sent a letter to petitioner,
inviting him to a conference on February 12, 1997, at
respondent's office. Respondent also informally requested that
petitioner produce certain documents pursuant to Rule 70(a)(1)
and to stipulate to the fullest extent possible to all matters
relevant to the pending case pursuant to Rule 91(a). Petitioner,
however, failed to attend the conference scheduled for February
12, 1997, failed to furnish respondent with the requested
documents, and failed to contact respondent for the purpose of
scheduling another meeting.
On February 18, 1997, after attempts to attain the
objectives of formal discovery through informal requests proved
fruitless, respondent served upon petitioner an 11-paragraph
interrogatory request, a 10-paragraph document request, and a 10-
paragraph request for admissions, pursuant to Rules 71, 72, and
90, respectively. These discovery requests sought various
documents and information pertaining to the issues at dispute in
this case.
On March 17, 1997, respondent mailed a letter to petitioner
inquiring about the status of respondent's formal discovery
- 7 -
requests. Respondent stated therein that "If we do not receive
timely replies to * * * [the interrogatories and request for
production of documents] then our office will request the Court
to impose the appropriate sanctions * * * for your failure to
respond." Despite this admonition, respondent received no reply
from petitioner.
On March 20, 1997, petitioner filed a timely though
generally uninformative response to respondent's request for
admissions. Petitioner admitted that he was the general partner
of the Partnership and that the Partnership had filed Forms 1065,
U.S. Partnership Return of Income, for the taxable years 1992 and
1993, but responded "No" to all other paragraphs of respondent's
request for admissions. In particular, these laconic responses
of "No" included petitioner's responses to paragraphs 9 and 10,
which stated that, for 1992 and 1993, the Partnership "did not
file the statement required by Treas. Reg. 301.6231(a)(1)-1T(b)
to elect treatment under the provisions of Subtitle F, Chapter
63, Subchapter C * * * of the Internal Revenue Code."
On April 2, 1997, respondent's counsel contacted petitioner
by telephone regarding the status of respondent's outstanding
formal discovery requests. Petitioner alleged that he was in the
process of responding but did not specify when he would supply
the requested documents. Shortly thereafter, pursuant to Rules
72(b) and 104(b), respondent moved for an order compelling
petitioner to produce the documents sought and to answer
- 8 -
respondent's interrogatories or for an order imposing sanctions.
On April 9, 1997, the Court granted both of respondent's
motions to compel. We ordered petitioner to answer each
interrogatory and to produce the requested documents on or before
April 28, 1997, or to file with the Court a reply to the order
stating adequate reasons for failure to comply with respondent's
requests in whole or in part.
On April 30, 1997, petitioner filed a Response to Order
Compelling Responses to Respondent's Interrogatories and Motion
to Compel Production of Documents in which he sought modification
of the Court's April 9, 1997, order. Petitioner claimed therein
that he had "no notice of a claim or assessment from the IRS to
date for Brown's Capital Properties II Limited Partnership" and
that all books and records of the Partnership were in the custody
of the Partnership's trustee in bankruptcy.
On May 19, 1997, at calendar call, an attorney, Thomas J.
Mattingly, was specially recognized to represent petitioner
pending Mattingly's application for admission to the Tax Court
bar and his filing of an entry of appearance in this case. At
that time petitioner filed a Motion for Continuance on account of
surgery Mattingly was scheduled to undergo later that week. The
Court orally stated that it would grant petitioner's motion over
respondent's objection. In so doing, however, the Court warned
petitioner that "I'm going to give petitioner a break, but it
will be the last one. * * * So get your records together * * *
- 9 -
You won't get another chance to come in and ask for a
continuance." The case was subsequently calendared for trial at
the session scheduled to commence on October 14, 1997, in
Washington, D.C. To date, Mattingly has neither entered an
appearance in this case, nor applied for admission to the Tax
Court bar.
On June 10, 1997, respondent's counsel mailed a letter to
petitioner to ascertain the status of petitioner's trial
preparation for this case. No reply to this letter was received
by respondent. On July 21, 1997, respondent's counsel attempted
to contact petitioner by telephone to inquire about respondent's
still outstanding formal discovery requests. Respondent's
counsel left a message on the telephone answering machine at the
telephone number listed on the petition.
On July 22, 1997, respondent's counsel spoke to petitioner
by telephone, during which conversation petitioner indicated that
he would send a letter to respondent's counsel and the Court
concerning this case. No such letter was received by either
respondent or the Court. On August 21, 1997, respondent's
counsel called petitioner yet again to inquire about respondent's
unanswered formal discovery requests. Respondent's counsel left
a message on the answering machine at the telephone number listed
on the petition.
On August 25, 1997, respondent filed a Motion to Impose
Sanctions under Rule 104(c) (Motion for Sanctions) for
- 10 -
petitioner's failure to comply with this Court's discovery order
of April 9, 1997. Respondent requested that the following
sanctions be imposed by the Court: (1) That this action be
dismissed; (2) that the issues to which respondent's discovery
requests pertain be taken as established as set forth in the
notice of deficiency; (3) that all answers covered by
respondent's request which petitioner should have made available
in response to respondent's interrogatories be excluded from
evidence in this case; (4) that all documents covered by
respondent's request which petitioner should have made available
in response to respondent's request be excluded from evidence;
and (5) that the Court grant such other relief as it may deem
proper.
Respondent also filed a Motion for Partial Summary Judgment
(Summary Judgment Motion) with accompanying memorandum of law and
declaration in support thereof pursuant to Rule 121(b) on August
25, 1997, on the issue (informally raised by petitioner during an
IRS Appeals Office conference but not raised by petitioner in
this proceeding) whether the 3-year period of limitations for
assessment has expired because the Partnership allegedly elected
treatment under the unified audit provisions of Subtitle F,
Chapter 63, Subchapter C, secs. 6221 through 6233, for taxable
years 1992 and 1993, and respondent did not honor such election.
By Order dated August 26, 1997, the Court ordered that
petitioner respond, on or before September 10, 1997, to
- 11 -
respondent's Motion for Sanctions and Summary Judgment Motion.
The Court further ordered that action on the aforementioned
motions would be held in abeyance until after that date.
On September 11, 1997, petitioner filed his Opposition to
Motion for Sanctions, in which he stated that "Petitioner shall
respond in full to Respondent's Interrogatories and Request for
Production in the next three (3) days" and sought to justify his
dilatoriness by referring to the illness of his wife. As noted
above, respondent's interrogatories and document request had been
served almost 7 months earlier--on February 18, 1997, and we
granted respondent's Motion to Compel Responses to Respondent's
Interrogatories and Motion to Compel Production of Documents over
5 months earlier--on April 9, 1997.
Petitioner also filed his Opposition to Motion for Partial
Summary Judgment on September 11, 1997, on the ground that the
Partnership did not fall within the small partnership exception
to the unified audit provisions of sections 6221 through 6233
and, since respondent failed to issue a Notice of Final
Partnership Administrative Adjustment (FPAA) pursuant to section
6223, the 3-year period of limitations for assessment set forth
in section 6229(a) has expired.
By Order dated September 12, 1997, this case was struck from
the October 14, 1997, calendar and reassigned to Judge Arthur L.
Nims, III.
- 12 -
Discussion
As the issue concerns the Court's jurisdiction over this
case, we first consider respondent's Summary Judgment Motion
pursuant to Rule 121(b) with respect to whether the 3-year period
of limitations for assessment has expired because the Partnership
allegedly elected treatment under the unified audit provisions of
sections 6221 through 6233 for the taxable years 1992 and 1993
and respondent did not honor such election. Respondent states in
the Summary Judgment Motion that this issue was raised informally
by petitioner during the local Appeals Office consideration of
this case.
Summary judgment or partial summary judgment may be granted
if the pleadings and other materials demonstrate that no genuine
issue exists as to any of the material facts and that a decision
may be rendered as a matter of law. Rule 121(b); Sundstrand
Corp. v. Commissioner, 98 T.C. 518, 520 (1992), affd. 17 F.3d 965
(7th Cir. 1994); Zaentz v. Commissioner, 90 T.C. 753, 754 (1988);
Naftel v. Commissioner, 85 T.C. 527, 529 (1985). The moving
party bears the burden of proving that there is no genuine issue
of material fact, and factual inferences will be read in a manner
most favorable to the party opposing summary judgment. Dahlstrom
v. Commissioner, 85 T.C. 812, 821 (1985); Jacklin v.
Commissioner, 79 T.C. 340, 344 (1982).
- 13 -
We are satisfied that no genuine issue exists as to any of
the material facts. Summary adjudication is therefore
appropriate in this case.
Section 6231(a)(1)(B) provides as follows:
(B) Exception For Small Partnerships.--
(i) In general.--The term "partnership" shall not
include any partnership if--
(I) such partnership has 10 or fewer partners each
of whom is a natural person (other than a nonresident
alien) or an estate, and
(II) each partner's share of each partnership item
is the same as his share of every other item.
For purposes of the preceding sentence, a husband and
wife (and their estates) shall be treated as 1 partner.
(ii) Election to have subchapter apply.--A
partnership (within the meaning of subparagraph (A))
may for any taxable year elect to have clause (i) not
apply. Such election shall apply for such taxable year
and all subsequent taxable years unless revoked with
the consent of the Secretary.
Section 301.6231(a)(1)-1T(b)(2), Temporary Proced. & Admin.
Regs., 52 Fed. Reg. 6790 (Mar. 5, 1987), provides as follows:
(2) Method of election. A partnership shall make
the election described in * * * [section
6231(a)(1)(B)(ii)] by attaching a statement to the
partnership return for the first taxable year for which
the election is to be effective. The statement shall
be identified as an election under section
6231(a)(1)(B)(ii), shall be signed by all persons who
were partners of that partnership at any time during
the partnership taxable year to which the return
relates, and shall be filed at the time * * * and place
prescribed for filing the partnership return. * * *
- 14 -
As previously noted, in his response to respondent's request
for admissions, petitioner replied "No" to paragraphs 9 and 10,
which stated that, for 1992 and 1993, the Partnership "did not
file the statement required by Treas. Reg. 301.6231(a)(1)-1T(b)
to elect treatment under the provisions of Subtitle F, Chapter
63, Subchapter C (I.R.C. sec. 6221 et al.) of the Internal
Revenue Code." However, it is apparent from the record that the
election contemplated by the above regulation was not filed for
1992 or 1993, and petitioner does not contend otherwise in his
"Opposition to Motion for Partial Summary Judgment" (Opposition).
Rather, petitioner argues in his Opposition that "the partnership
had no need to make a special, separately-signed unanimous
election to * * * apply the consolidated audit and notice
provisions" for 1992 and 1993 because, for various reasons, the
Partnership did not fall within the small partnership exception
of section 6231(a)(1)(B) during those years.
In response to petitioner's argument, upon our examination
of the record, including the Forms 1065 for 1992 and 1993 and
Schedules K-1 attached thereto, we are convinced that the
Partnership was indeed a small partnership within the meaning of
section 6231(a)(1)(B) in those years. In 1992 and 1993, the
Partnership consisted of 10 or fewer partners based on the
counting rule of section 6231(a)(1)(B)(i), which provides that a
husband and wife (and their estates) shall be treated as 1
- 15 -
partner for purposes of that section. Moreover, we have found
that each of the partners was a natural person and none was a
nonresident alien during the relevant years. Sec.
6231(a)(1)(B)(i)(I).
In addition, the "same share" requirement of section
6231(a)(1)(B)(i)(II) was met, inasmuch as the Partnership
reported only one partnership item (partnership loss) on its
returns for 1992 and 1993. See Harrell v. Commissioner, 91 T.C.
242, 246-247 (1988); Z-Tron Computer Program v. Commissioner, 91
T.C. 258, 262 (1988); Schwartz v. Commissioner, T.C. Memo. 1996-
88; sec. 301.6231(a)(1)-1T(a)(3), Temporary Proced. & Admin.
Regs., 52 Fed. Reg. 6790 (Mar. 5, 1987).
Since the Partnership was a small partnership within the
meaning of section 6231(a)(1)(B) and an election comporting with
the prescriptions of section 301.6231(a)(1)-1T(b)(2), Temporary
Proced. & Admin. Regs., was not made, respondent was not required
to issue an FPAA. Accordingly, we conclude that a valid notice
of deficiency was issued within 3 years of the time of filing of
petitioner's Forms 1040 for 1992 and 1993. Sec. 6501(a). An
order will therefore be issued granting respondent's Summary
Judgment Motion.
We next address respondent's motion to impose Rule 104(c)
sanctions, including dismissal, against petitioner for his
- 16 -
failure to comply with the Court's April 9, 1997, discovery
order.
Rule 104(c) provides as follows:
(c) Sanctions: If a party or an officer,
director, or managing agent of a party or a person
designated in accordance with Rule 74(b), 75(c), or
81(c) fails to obey an order made by the Court with
respect to the provisions of Rule 71, 72, 73, 74, 75,
76, 81, 82, 83, 84, or 90, then the Court may make such
orders as to the failure as are just, and among others
the following:
(1) An order that the matter regarding which
the order was made or any other designated facts
shall be taken to be established for the purposes
of the case in accordance with the claim of the
party obtaining the order.
(2) An order refusing to allow the
disobedient party to support or oppose designated
claims or defenses, or prohibiting such party from
introducing designated matters in evidence.
(3) An order striking out pleadings or parts
thereof, or staying further proceedings until the
order is obeyed, or dismissing the case or any
part thereof, or rendering a judgment by default
against the disobedient party.
(4) In lieu of the foregoing orders or in
addition thereto, the Court may treat as a
contempt of the Court the failure to obey any such
order, and the Court may also require the party
failing to obey the order * * * to pay the
reasonable expenses, including counsel's fees,
caused by the failure * * *
Our Rule 104(c) is based upon rule 37(b)(2) of the Federal
Rules of Civil Procedure (FRCP). Dusha v. Commissioner, 82 T.C.
592, 598 (1984); Note to Rule 104(c), 60 T.C. 1124 (1973). Rule
104(c) and FRCP 37(b)(2) prescribe various sanctions for a
- 17 -
party's failure to comply with a court's discovery orders. In
interpreting and applying this Court's discovery rules, we
normally look for guidance to court decisions interpreting their
counterparts in the FRCP. See Rosenfeld v. Commissioner, 82 T.C.
105, 116-117, 120 (1984); Owens-Illinois, Inc. v. Commissioner,
76 T.C. 493, 495-496 (1981); Zaentz v. Commissioner, 73 T.C. 469,
473-474 (1979).
Under FRCP 37(b)(2), once it has been shown that a party has
not complied with a court's discovery order, sanctions are
appropriate. Societe Internationale v. Rogers, 357 U.S. 197,
206-208 (1958). However, inasmuch as dismissal is one of the
most severe sanctions available under FRCP 37(b)(2), it is
reserved for the most egregious cases where a party's conduct
clearly warrants it. See, e.g., Marshall v. Segona, 621 F.2d
763, 767-768 (5th Cir. 1980); Jones v. Louisiana State Bar
Association, 602 F.2d 94, 97 (5th Cir. 1979); see also Dusha v.
Commissioner, supra at 605.
In Societe Internationale v. Rogers, supra, the Supreme
Court construed FRCP 37(b)(2). Because of due process concerns,
the Supreme Court held that dismissal was improper where the
party's failure to comply was "due to inability, and not to
willfulness, bad faith, or any fault of * * * [the party]." Id.
at 212. However, if willfulness, bad faith, or other fault is
present, dismissal may be appropriate even though there has been
- 18 -
a partial response to a court's discovery order. See National
Hockey League v. Metropolitan Hockey Club, Inc., 427 U.S. 639
(1976); see also Dusha v. Commissioner, supra at 604 ("If the
standard of Societe Internationale is met * * *, token minimal
compliance will not bar the sanction of dismissal.")
The United States Court of Appeals for the Fourth Circuit,
to which the dismissal of this case would be appealable, barring
agreement to the contrary, has formulated prerequisites for
dismissal of a case under Rule 104(c)(3).
According to the Court of Appeals for the Fourth Circuit, a
court must consider a list of four factors: (1) Whether the
noncomplying party acted in bad faith; (2) the amount of
prejudice the noncompliance caused the adversary; (3) the need
for deterring the particular type of noncompliance; and (4) the
efficacy of less drastic sanctions. Hillig v. Commissioner, 916
F.2d 171, 174 (4th Cir. 1990), vacating T.C. Memo. 1989-476;
Mutual Fed. Sav. & Loan Association v. Richards & Associates, 872
F.2d 88, 92 (4th Cir. 1989).
First, we are convinced that petitioner has acted willfully
and in bad faith by his noncompliance and misrepresentations to
the Court. Cf. Hillig v. Commissioner, supra at 174-175. Our
Rules of Practice and Procedure and our orders mean exactly what
they say, and we intend that they be heeded. Rosenfeld v.
Commissioner, supra at 111; Odend'hal v. Commissioner, 75 T.C.
- 19 -
400, 404 (1980); Branerton Corp. v. Commissioner, 61 T.C. 691,
692 (1974). Although given ample opportunity to comply with our
rules and an order of this Court, petitioner has not done so, and
we descry no valid reason in the record to explain his
noncompliance. He has essentially ignored and defied our order
of April 9, 1997, and by such action, has shown unremitting
disrespect for our rules and an order of this Court.
What we are confronted with here is not an isolated instance
of noncompliance but a pattern of deliberate dilatory behavior.
See Mutual Fed. Sav. & Loan Association v. Richards & Associates,
supra at 93. In that connection we note that from the start
petitioner failed to cooperate with respondent's informal
discovery, the "bedrock" of practice before this Court.
Branerton v. Commissioner, supra at 692. Petitioner then failed,
in violation of Rules 71 and 72, to respond to the formal
discovery requests served by respondent. Finally, petitioner
disregarded the terms of the Court's April 9, 1997, order.
Petitioner's pattern of noncompliance follows on the heels of our
unequivocal warnings that the Court might impose sanctions,
including dismissal, if petitioner failed to cooperate.
Second, we conclude that respondent has suffered substantial
prejudice as a result of petitioner's misconduct insofar as the
information and documents requested were indispensable to the
substantive issue regarding Partnership losses at dispute in this
- 20 -
case. See Mutual Fed. Sav. & Loan Association v. Richards &
Associates, supra at 93. Petitioner's failure to comply with
this Court's order doubtless significantly impeded respondent's
preparations for a proper trial.
Third, we think that the sanction of dismissal is warranted
not merely to prevent prejudice to respondent, but also to deter
those who might be tempted, in the future, to engage in similar
conduct. See National Hockey League v. Metropolitan Hockey Club,
Inc., 427 U.S. at 643. Petitioner's actions, if left unchecked,
would undermine the Court's ability to control the litigation
before it.
Finally, we have considered whether, under these
circumstances, alternative sanctions of a nature less severe than
dismissal are appropriate. We do not believe that they are.
Petitioner's intractability makes it unlikely that imposing any
lesser sanction would alter his behavior. See Harper v.
Commissioner, 99 T.C. 533, 542 (1992) (Rule 123(b)). Moreover,
any lesser sanction would require the Court to set this matter
once again for trial and would, in effect, grant petitioner a
continuance, which, at the calendar call on May 19, 1977, we
expressly stated we would not permit. Such a result would reward
petitioner for his recalcitrance and obduracy. Furthermore,
respondent's position on the substantive issue in this case is
that disallowed Partnership losses necessitate corresponding
- 21 -
adjustments to petitioner's income. If we were to deem that
matter established as set forth in the notice of deficiency for
purposes of this case, as contemplated by Rule 104(c)(1), then
respondent would prevail. Similarly, if we were to issue an
order refusing to allow petitioner to oppose respondent's claims
on that point, or prohibiting petitioner from introducing
evidence requested by respondent, as contemplated by Rule
104(c)(2), then respondent would also prevail. See Geodesco v.
Commissioner, T.C. Memo. 1990-637. Finally, we do not believe
that economic sanctions prescribed by Rule 104(c)(4) are
sufficient inasmuch as the stark prospect of dismissal and entry
of decision against petitioner has not heretofore deterred
petitioner's pertinacious conduct.
We note that, unlike Hillig v. Commissioner, supra at 174,
dismissal of this case would not unjustly penalize a blameless
client for the culpable behavior of his attorney. Moreover,
while the record therein was redolent of "sloppiness and a lack
of communication" and did not support a conclusion that the delay
was deliberate, the facts of the instant matter are irrefragably
to the contrary. Id.
In his response to our order granting respondent's motions
to compel, petitioner asserts that he could not comply with
respondent's discovery requests because all books and records of
the Partnership were held by its trustee in bankruptcy.
- 22 -
Petitioner's bankruptcy petition under Chapter 13 of the United
States Bankruptcy Code was dismissed with prejudice by the
Bankruptcy Court on May 16, 1996, approximately 7 months before
Notice of Trial (December 19, 1996), and approximately one year
before the trial date (May 19, 1997). But petitioner has made no
showing of any attempt on his part to retrieve the Partnership
records, so his lack of records, if such is indeed the case, is
of his own doing and cannot serve as an excuse to justify the
predicament in which he now claims to find himself.
In light of the foregoing, we shall grant respondent's
motion to impose sanctions under Rule 104(c). We conclude that
dismissal of this case for failure to heed a specific discovery
order of this Court, although a harsh sanction, is nonetheless
appropriate under Rule 104(c)(3), and we so hold. See, e.g.,
Miller v. Commissioner, 741 F.2d 198 (8th Cir. 1984), affg. per
curiam an order of dismissal and decision of this Court;
Steinbrecher v. Commissioner, 712 F.2d 195 (5th Cir. 1983), affg.
T.C. Memo. 1983-12. A decision will be entered which provides
that there are due from petitioner deficiencies in income tax and
accuracy-related penalties under section 6662(a) in the amounts
determined by respondent for the taxable years 1992 and 1993.
To reflect the foregoing,
An appropriate order
- 23 -
and order of dismissal and
decision will be entered.