1 All section references are to the Internal Revenue Code

in effect for the year in issue, and all Rule references are to

the Tax Court Rules of Practice and Procedure.

T.C. Memo. 1998-424

UNITED STATES TAX COURT

DENSON C. AND LINDA C. BRUMLEY, Petitioners v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 15751-97. Filed November 25, 1998.

Lorenzo W. Tijerina, for petitioners.

Franklin R. Hise, for respondent.

MEMORANDUM OPINION

GOLDBERG, Special Trial Judge: This case was heard pursuant

to section 7443A(b)(3) and Rules 180, 181, and 182.1 In a notice

of deficiency dated April 23, 1997, respondent determined a

deficiency in petitioners’ Federal income tax for the taxable
- 2 -

year 1994 and an addition to tax under section 6651(a) in the

amounts of $4,092 and $1,091.99, respectively.

Petitioners’ attorney, Lorenzo W. Tijerina (Mr. Tijerina),

filed a timely petition on their behalf on July 22, 1997,

disputing the entire amount of the deficiency and addition to

tax. At the time of the filing of their petition, petitioners

resided in San Antonio, Texas. Respondent filed an Answer on

August 25, 1997, and the issues were joined at that time.

On November 20, 1997, the Clerk of the Court served the

parties with a notice setting the case for trial on the February

9, 1998, trial session in San Antonio, Texas. The Court’s

Standing Pre-Trial Order was also served at the same time.

The Standing Pre-Trial Order, among other things, required

the parties to: (1) Stipulate all facts to the maximum extent

possible; (2) mark all documents and written evidence; (3)

identify all documents or materials which either party expects to

utilize in the event of trial and exchange said documents 15 days

before the first day of the trial session; (4) prepare a trial

memorandum substantially in the form attached to the order, and

submit it to the Special Trial Judge assigned to the session and

the opposing party not less than 15 days before the first day of

the trial session; and (5) identify all witnesses in the trial

memorandum with a brief summary of the anticipated testimony of

such witnesses. The pre-trial order also provided for
- 3 -

appropriate sanctions for noncompliance. The Court received

respondent’s trial memorandum on January 28, 1998. Petitioners’

counsel did not submit a trial memorandum.

The case was called from the calendar on Monday, February 9,

1998. Counsel for petitioners and respondent appeared and were

heard. The parties reported that no basis of settlement was

reached and no stipulation of facts had been agreed to and

signed. Respondent stated that he had no contact with Mr.

Tijerina and had not received a trial memorandum from petitioners

and orally moved that this case be dismissed. Respondent did not

state the grounds for his motion. Mr. Tijerina made no objection

to respondent’s oral motion. Counsel for petitioners stated that

he would meet with respondent’s representatives in an attempt to

settle the case, and, in the event the case was not settled,

petitioners would be ready for trial on Wednesday, February 11,

1998. 

The case was recalled for trial on Wednesday, February 11,

1998. Counsel appeared and offered a bare bones stipulation of

facts into evidence with two exhibits; namely, petitioners’ 1994

Federal income tax return and the notice of deficiency. The

stipulation of facts, together with exhibits, was received into

evidence. Respondent’s trial memorandum, received in Washington,

D.C., on January 28, 1998, was also filed at trial. Respondent

did not pursue his oral motion to dismiss. Respondent then
- 4 -

orally moved for summary judgment which we treated as a motion

for entry of decision based upon the fact that no further issues

remained to be heard in this case. Petitioners’ counsel did not

dispute the unreported income determined by respondent, but

argued that petitioners are entitled to be heard on the issue of

deductible business expenses.

Petitioners filed their joint Federal income tax return for

1994 on January 9, 1996. Included as wages on Line 7 of the

return was the amount of $31,297 paid by Preneed Marketing

Associates to petitioner Linda Brumley (Ms. Brumley). This

amount was reported on a Form 1099--MISC. issued to Ms. Brumley

by the payor.

Respondent determined in the notice of deficiency that

petitioners were subject to self-employment tax for 1994 on the

$31,297 received by Ms. Brumley and liable for the addition to

tax for failure to timely file their joint Federal income tax

return for 1994. This is the only adjustment to petitioners’

Federal income tax return for 1994 made by respondent in the

notice of deficiency. 

In his opening statement on Wednesday, February 11, 1998,

Mr. Tijerina conceded that Ms. Brumley was self-employed in 1994

and her income was subject to self-employment tax. However, he

claimed for the first time that Ms. Brumley is entitled to

certain business expense deductions incurred in earning her
- 5 -

income as an independent insurance agent, the effect of which, if

determined to be deductible, would reduce her self-employment

income and the resulting self-employment tax. It was at this

point that respondent orally moved for a motion for entry of

decision.

We deal first with the question of whether we should allow

petitioners to raise for the first time, on the date set for

trial, the issue regarding their entitlement to deduct certain

business expenses in computing net income subject to selfemployment tax. We must look at the pleadings to see if this

issue is, indeed, a new issue, and, if it is, consider whether

trying this new issue places respondent at an unfair

disadvantage. 

Petitioners argue that the issue of petitioners’ entitlement

to business deductions is not a new issue because their petition

implicitly raises the issue since they have contested the whole

amount of the deficiency. Therefore, petitioners contend that

respondent had knowledge of the issue and has not been placed at

a disadvantage. Petitioners further assert that even if we find

that this is a new issue, they should be permitted to amend the

petition and raise the issue. Respondent strongly objects to

petitioners’ attempt to raise this issue contending that it is a

new issue raised for the first time on the day of the trial. We

believe respondent’s objection to be well taken. 
- 6 -

This Court has held on numerous occasions that it will not

consider issues which have not been pleaded. Foil v.

Commissioner, 92 T.C. 376, 418 (1989), affd. per curiam 920 F.2d

1196 (5th Cir. 1990); Markwardt v. Commissioner, 64 T.C. 989

(1975), and cases cited therein at 997. Whether an issue has

been properly raised depends upon whether the opposing party has

been given fair notice of the matter in controversy. Rule 31(a).

Rule 34 requires that the petition contain clear and concise

assignments of each and every error alleged and statements of

facts on which petitioner relies to sustain each assignment of

error. Rule 34(b)(4) and (5).

Paragraph 4 of the form petition (T.C. Form 2), filed by Mr.

Tijerina, states:

Taxpayers are taking exception to the $4,092.00

increase in tax and the penalty of $1,091.99. Taxpayer

has a good faith belief based on his related tax year

schedules that he does not owe the cited deficiencies

and penalties.

Other than contesting the full amount of the deficiency and

addition to tax, the above statement is the only allegation in

the petition.

 We find that petitioners did not raise the issue of their

entitlement to business expense deductions in their petition

filed with the Court. Further, there are no other statements or

allegations in the petition which raise the issue of offsetting
- 7 -

business deductions in the event this Court should determine that

Ms. Brumley’s income was subject to self-employment tax.

Rule 41(a) provides that a pleading may be amended once as a

matter of course at any time before a responsive pleading is

served, and, thereafter, amendment may be made by leave of the

Court or by written consent of the adverse party. Prior to

trial, petitioners had never requested leave of this Court to

amend their petition and did not raise this new issue until the

date set for trial of this case. At this late date we will not

permit petitioners to amend their pleading. 

This case is not one where an issue has been tried by

express or implied consent of the parties, in which event we

treat the issue as if raised in the pleadings. Rule 41(b). This

case presents a situation in which respondent’s counsel was

faced, on the date of trial, with trying an issue not known to

him.

Further, Mr. Tijerina has failed to comply with our Standing

Pre-Trial Order. He did not meet with respondent to stipulate

facts and exhibits after service of our Standing Pre-Trial Order,

and has not submitted a trial memorandum. When asked by the

Court why he failed to comply with the requirements of the

Standing Pre-Trial Order, Mr. Tijerina offered no satisfactory

explanation. Not only did he fail to raise the issue in a trial

memorandum so that the Court and respondent would be apprised of
- 8 -

it before calendar call, he did not raise it even at the call of

the calendar. 

Mr. Tijerina met with respondent for the first time on

Monday, February 9, 1998. He had no substantiation for any

alleged business expenses. On the following Wednesday, however,

Mr. Tijerina claimed that petitioners provided him with some

documentation for purported expenses in connection with their

self-employment income.

This Court has an interest in promoting respect for the

judicial process and encouraging orderly disposition of cases. 

The Court expects the litigants to respect the judicial process

through even-handed enforcement of its Rules, which are designed

to serve the just, speedy, and inexpensive determination of each

case. See Rule 1(b); see also sec. 7453. If a party is

permitted to disregard the procedures established by this Court,

unfairness to others and disruption of the Court’s processes

occur. Attorneys admitted to practice before our Court are

presumed to know our Rules of Practice and Procedure and must

comply with our orders in a timely manner. We shall not permit

petitioners to present evidence in support of the new issue

raised at trial.

Pursuant to the stipulation of facts, the attached exhibits,

and concessions of petitioners, we find that the $31,297 Ms.

Brumley received in 1994 was self-employment income subject to
- 9 -

self-employment tax, and petitioners’ 1994 Federal income tax

return due to be filed on or before April 15, 1995, was filed on

January 9, 1996, and, therefore, was untimely. Furthermore,

petitioners offered no evidence whatsoever that their failure to

timely file their return was due to reasonable cause and not due

to willful neglect. In view of the above, respondent is

sustained on these issues. 

Inasmuch as we have sustained respondent on these two

issues, respondent’s oral motion for entry of decision is deemed

moot.

To reflect the foregoing,

 Decision will be entered

for respondent.