MEMORANDUM FINDINGS OF FACT AND OPINION
DAWSON, Judge: This case was assigned to Special Trial Judge Francis J. Cantrel for the purpose of conducting the hearing and ruling on respondent's Motion for Summary Judgment filed herein.After a review of the record, we agree with and adopt his opinion which is set forth below. 1
OPINION OF THE SPECIAL TRIAL JUDGE
CANTREL, Special Trial Judge: This case is before the Court on respondent's Motion for Summary Judgment filed on March 22, 1983, pursuant to Rule 121, Tax Court Rules of Practice and Procedure.2
Respondent, in his notice of deficiency issued to petitioners on September 21, 1977 determined a deficiency in petitioners' Federal income tax for the taxable calendar years 1972 and 1973 in the respective amounts of $1,738.50 and $1,683.56. The adjustments determined by respondent in his deficiency notice are for unreported tip ("toke") income received by petitioner, Manuel Martinez (hereinafter called petitioner) in 1972 and 1973 in the amounts of $7,261.40 and $6,870.00, respectively. In addition, for 1972, respondent has disallowed a claimed charitable contribution in the amount of $187.00.
Petitioners timely filed their petition on December 20, 1977 and respondent filed his answer thereto on February 8, 1978. Thus, the pleadings are closed. Respondent's motion was filed more than 30 days after the pleadings were closed. See Rules 34, 36, 38, and 121.
When respondent's good faith attempts to make arrangements with petitioners' counsel for informal consultations or communications proved unsuccessful, 3 he, not desiring to rest on the pleadings alone, on July 16, 1982, served a 47 paragraph Request for Admissions on petitioners' counsel. 4 Petitioners' counsel at no time served written answers upon respondent nor did he file an original of such answers with the Court. Rule 90(c). Hence, each matter contained in respondent's request for admissions is deemed admitted and conclusively established. 5
The following findings of fact are based upon the record as a whole, the allegations of respondent's answer admitting allegations in the petition, the matters deemed admitted with respect to respondent's request for admissions, exhibits attached to respondent's motion and three affidavits.
FINDINGS OF FACT
Petitioners resided at 2009 LaBrisa, Las Vegas, Nevada on the date their petition was filed. They filed joint 1972 and 1973 Federal income tax returns with the Internal Revenue Service.
During 1972 and 1973 petitioner was employed as a blackjack dealer at the Sands Hotel and Casino (hereinafter sometimes referred to as "the Casino"). His normal work shift constituted 8 hours per day and he was only required to work, by his employer, 5 days out of any consecutive 7 day period. His normal days off during this period were Tuesdays and Wednesdays.
In the course of his employment petitioner received tokes from patrons of the Casino. In accordance with house rules these tokes were routinely pooled by petitioner and other blackjack dealers, roulette dealers, and Big Wheel dealers, by placing said tokes in a common toke box before leaving the area of the gaming tables on a break or at the end of a shift. The total amount so pooled was divided at the end of each 24-hour period among the dealers on duty during that 24-hour period. These pooled tokes were divided on the basis of a full share to a dealer for each 8 hour shift. Dealers generally received their share of the pooled tokes in an envelope when they returned to work at the beginning of their next shift. Under house rules some provision was made for allowing a share of the tokes for dealers who were unable to work because of illness. During 1972 and 1973 petitioner participated in and received his equal share of such pooled tokes.
Petitioner, in 1972 and 1973 did not maintain a written diary, log, worksheet, or other record, made at or near the time he received tokes, which set forth the date, amount of tokes received and amounts he may have expended as gratuities to co-workers.
Players (patrons) at the Casino did from time to time place bets on petitioner's behalf. Such bets remained under the control of the patron until the winnings, if any, were actually given to petitioner. The patron was free to take back the winning bet if he so desired. The Nevada State Gaming Authority regards a bet made by a patron for petitioner as a wager made by and on behalf of the patron. Petitioner was forbidden from gambling or placing bets at the table he was working. Under house rules any winning bets received by petitioner were pooled and distributed. Neither petitioner nor the toke pool was required to reimburse a patron who had placed a losing bet on petitioner's behalf.
In both 1972 and 1973 petitioner gambled in his individual and private capacity during his off duty time. He maintained no records which accurately reflected the date, amount of bets and amounts won and lost.
Petitioner was paid a salary by his employer in both 1972 and 1973. The salary was in addition to the tokes he received in those years. In 1972 he was paid a salary for 241 8-hour shifts. He was paid for 8-hour shifts when he did not actually work; such shifts did not exceed 21 for 1972. 6 During 1973 he was paid a salary by his employer for 240 8-hour shifts, which included some shifts when he did not actually work; such shifts did not exceed 20 for 1973. 7 Petitioners reported the salary petitioner received from his employer on their 1972 and 1973 returns.
Petitioner is required by law to report the toke income he receives to his employer. For 1972 and 1973 he reported to his employer that he received toke income in the respective amounts of $1,328 and $2,127. 8 In addition, petitioner reported toke income on the 1972 and 1973 returns in the respective amount of $2,888 and $3,675. The amounts so reported to his employer and reported on the 1972 and 1973 joint returns were based on estimates and not upon any written records. No additional toke income was reported on those returns.
The amount of toke income received by petitioner in 1972 averaged not less than $52.17 for each 8-hour shift he actually worked and for 1973 it averaged not less than $57.60 for each 8-hour shift actually worked. Petitioner received additional toke income in 1972 and 1973 in the respective amounts of $7,261.40 and $6,870.00, which was not reported on the joint Federal income tax returns filed for those years.
Petitioners, on their 1972 return claimed a charitable contribution deduction of $399. Upon audit they substantiated $212 of this claimed deduction, which respondent has allowed. Petitioners did not, fact, expend more than $212 for this claimed deduction in 1972.
Petitioners do not have knowledge of any material facts which would distinguish this case from those of petitioners, similarly situated, in Williams v. Commissioner,T.C. Memo. 1980-494.
Petitioners do not have in their possession or under their control any documentary evidence to support the allegations of their petition that respondent's determinations are arbitrary.
OPINION
It is well settled that tokes are not gifts but taxable income which must be included in a taxpayer's gross income. Olk v. United States,536 F.2d 876 (9th Cir. 1976); 9Whitley v. Commissioner,T.C. Memo. 1983-226; Capri v. Commissioner,T.C. Memo. 1983-201; Clover v. Commissioner,T.C. Memo. 1983-181; Foreman v. Commissioner,T.C. Memo. 1983-130; Parker v. Commissioner,T.C. Memo. 1983-87; Kurimai v. Commissioner,T.C. Memo. 1983-86; Parker v. Commissioner,T.C. Memo. 1983-85; Randolph v. Commissioner,T.C. Memo. 1983-84;Owens v. Commissioner,T.C. Memo. 1983-30; Williams v. Commissioner,supra. It is conclusively established in this record that petitioner received unreported toke income in 1972 and 1973 in the respective amounts of $7,261.40 and $6,870.00.
Petitioners' contention that respondent's determinations are arbitrary is baseless. Here, petitioner kept no records which would accurately reflect the toke income which he received in 1972 and 1973. In such circumstance, the Commissioner may, in his notice of deficiency, make a determination based upon any reasonable method where a taxpayer refuses to produce his records or where those records are inadequately maintained. Holland v. United States,348 U.S. 121 (1954); Merritt v. Commissioner,301 F.2d 484, 486 (5th Cir. 1962); Cupp v. Commissioner,65 T.C. 68, 82 (1975), affd. in an unpublished opinion 559 F.2d 1207 (3rd Cir. 1977); Giddio v. Commissioner,54 T.C. 1530 (1970); Meneguzzo v. Commissioner,43 T.C. 824 (1965).10
Respondent's determinations herein are presumptively correct and the burden is on petitioners to establish that they are incorrect or arbitrary. Welch v. Helvering,290 U.S. 111 (1933); Avery v. Commissioner,574 F.2d 467, 468 (9th Cir. 1978); Rule 142(a). Petitioners here totally failed to show that those determinations are incorrect or arbitrary.
Rule 121(b) provides that a motion for summary judgment shall be granted if the "pleadings * * * admissions and any other acceptable materials, together with the affidavits * * * show that there is no genuine issue as to any material fact and that a decision may be rendered as a matter of law. * * *". [Emphasis supplied.]
Here, petitioners have refused to submit any information which contradicts respondent's factual determinations. On the basis of the pleadings, those matters deemed admitted in respondent's request for admissions, the exhibits attached to respondent's motion (which include copies of the 1972 and 1973 returns and a full copy of the notice of deficiency) and respondents' affidavits, respondent has amply demonstrated to our satisfaction that there is no genuine issue as to any material fact present in this record and, thus, that respondent is entitled to a decision as a matter of law. Hence, summary judgment is a proper procedure for disposition of this case. Respondent's Motion for Summary Judgment will be granted.
An appropriate order and decision will be entered.