                         T.C. Memo. 2004-282



                       UNITED STATES TAX COURT



                 TIMOTHY R. BECHERER, Petitioner,
            AND LESLEY LOUISE BECHERER, Intervenor v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 1429-03.             Filed December 20, 2004.


     Timothy R. Becherer, pro se.

     Ric D. Hulshoff, for respondent.



                         MEMORANDUM OPINION


     VASQUEZ, Judge:    Respondent determined that petitioner did

not qualify for relief from joint and several liability pursuant

to section 6015(b), (c), or (f).1   The issue for decision is



     1
        Unless otherwise indicated, all section references are to
the Internal Revenue Code, and all Rule references are to the Tax
Court Rules of Practice and Procedure.
                                - 2 -

whether petitioner is entitled to relief from joint and several

income tax liability for 1996 pursuant to section 6015(b), (c),

or (f).

Background

     Some of the facts have been stipulated and are so found.

The stipulation of facts and the attached exhibits are

incorporated herein by this reference.     At the time he filed his

petition, petitioner resided in Los Angeles, California.2

     Petitioner and Lesley Louise Becherer (Ms. Becherer) married

on February 23, 1994, and divorced on September 26, 1997.

     Petitioner and Ms. Becherer filed a joint income tax return

for 1996.    In the notice of deficiency for 1996, respondent

determined that petitioner and Ms. Becherer had five items of

unreported income.    The five items consisted of income from four

employers and a distribution from the City of Clearwater.      The

distribution from the City of Clearwater was attributable to

petitioner.    The income received from one employer, Cenex

Services, was attributable to petitioner.     The income received

from the remaining three employers,     TTC Illinois, Trader

Publications, and Pennysaver, was attributable to Ms. Becherer.

Respondent determined a deficiency of $1,833 in petitioner’s and

Ms. Becherer’s 1996 Federal income tax liability.     Apart from the


     2
        At trial, respondent orally moved that intervenor be
dismissed for lack of prosecution. That motion is denied by the
Court.
                                - 3 -

claim by petitioner under section 6015, respondent’s

determinations contained in the notice of deficiency are not in

dispute.

     Petitioner knew of Ms. Becherer’s employment with the three

employers.    Petitioner occasionally assisted Ms. Becherer in

performing her employment duties for Trader Publications and

Pennysaver.

     When the 1996 Federal income tax return was prepared,

petitioner was a sophomore or junior in college, and Ms. Becherer

held a high school general equivalency diploma.    Petitioner had

an opportunity to review the 1996 Federal income tax return

before the return was filed.    Petitioner currently holds a degree

in communications from the University of Miami and is employed as

a video editor for E-Entertainment Network.

                             Discussion

     In general, spouses filing joint Federal income tax returns

are jointly and severally liable for all taxes due.    Sec.

6013(d)(3).    Under certain circumstances, however, section 6015

provides relief from this general rule.    Except as otherwise

provided in section 6015, petitioner bears the burden of proof.3




     3
        Petitioner does not contend that sec. 7491(a) is
applicable to this case, nor is there evidence that the
examination commenced after July 22, 1998. Also, we note that
some documents in the record indicate that the examination began
prior to July 22, 1998.
                               - 4 -

Rule 142(a); Jonson v. Commissioner, 118 T.C. 106, 113 (2002),

affd. 353 F.3d 1181 (10th Cir. 2003).

I.   Relief Under Section 6015(b)

     To qualify for relief from joint and several liability under

section 6015(b)(1), a taxpayer must establish:

          (A) a joint return has been made for a taxable year;

          (B) on such return there is an understatement of
     tax attributable to erroneous items of 1 individual
     filing the joint return;

          (C) the other individual filing the joint return
     establishes that in signing the return he or she did
     not know, and had no reason to know, that there was
     such understatement;

          (D) taking into account all the facts and
     circumstances, it is inequitable to hold the other
     individual liable for the deficiency in tax for such
     taxable year attributable to such understatement; and

          (E) the other individual elects (in such form as
     the Secretary may prescribe) the benefits of this
     subsection not later than the date which is 2 years
     after the date the Secretary has begun collection
     activities with respect to the individual making the
     election * * *.

     The requirements of section 6015(b)(1) are stated in the

conjunctive.   Accordingly, a failure to meet any one of them is

sufficient for us to find that petitioner does not qualify for

relief pursuant to section 6015(b).     Alt v. Commissioner, 119

T.C. 306, 313 (2002).

     Respondent contends that petitioner failed to meet the

requirements of subparagraphs (B), (C), and (D).    Respondent

concedes that petitioner meets the requirements of subparagraphs
                               - 5 -

(A) and (E).   For the sake of completeness, we shall discuss the

application of 6015(b)(1)(B), (C), and (D).    See Jonson v.

Commissioner, supra at 119.

     A.    Section 6015(b)(1)(B):   Attributable to One Spouse

     Section 6015(b)(1)(B) mandates that the understatement of

tax be attributable to erroneous items of the nonrequesting

spouse.   Five items were omitted from the 1996 return and

petitioner concedes that two of the items, the distribution from

the City of Clearwater and the income received from Cenex

Services, are solely attributable to him.    Therefore, petitioner

cannot qualify for section 6015(b) relief for the two items.

     B.    Section 6015(b)(1)(C):   Know or Reason To Know

     The requirement in section 6015(b)(1)(C), the

no-knowledge-of-the-understatement requirement, is virtually

identical to the requirement of former section 6013(e)(1)(C);

therefore, cases interpreting former section 6013(e) remain

instructive to our analysis.   Jonson v. Commissioner, supra at

115; Butler v. Commissioner, 114 T.C. 276, 283 (2000).

     Venue for appeal of our decision would be to the U.S. Court

of Appeals for the Ninth Circuit.    In omission of income cases

under former section 6013(e)(1), this Court and the U.S. Court of

Appeals for the Ninth Circuit have held that a spouse seeking

relief knows of an understatement of tax if he or she knows or

has reason to know of the transaction that gave rise to the
                                - 6 -

understatement.    See Guth v. Commissioner, 897 F.2d 441, 443-444

(9th Cir. 1990), affg. T.C. Memo. 1987-522; Cheshire v.

Commissioner, 115 T.C. 183 (2000), affd. 282 F.3d 326 (5th Cir.

2002); Braden v. Commissioner, T.C. Memo. 2001-69.     Accordingly,

in such circumstances, innocent spouse relief is denied.

     Petitioner knew of Ms. Becherer’s employment with TTC

Illinois, Trader Publications, and Pennysaver.     Ms. Becherer’s

income from these employers was not included on the 1996 Federal

income tax return.    We conclude that petitioner had reason to

know of Ms. Becherer’s understatement of income.     Therefore,

petitioner does not satisfy the requirement of section

6015(b)(1)(C).

     C.     Section 6015(b)(1)(D):   Inequitable To Hold Liable

     The requirement in section 6015(b)(1)(D), that it be

inequitable to hold the requesting spouse liable for an

understatement on a joint return, is virtually identical to the

requirement of former section 6013(e)(1)(D); therefore, cases

interpreting former section 6013(e) remain instructive to our

analysis.    Butler v. Commissioner, supra at 283.

     Whether it is inequitable to hold a spouse liable for a

deficiency is determined “taking into account all the facts and

circumstances”.    Sec. 6015(b)(1)(D).   The most often cited

material factors to be considered are (1) whether there has been

a significant benefit to the spouse claiming relief, and (2)
                               - 7 -

whether the failure to report the correct tax liability on the

joint return results from concealment, overreaching, or any other

wrongdoing on the part of the other spouse.    Alt v. Commissioner,

supra at 314; Jonson v. Commissioner, 118 T.C. at 119.

     No such untoward circumstances are present in this case.

There was no concealment on Ms. Becherer’s part.   Ms. Becherer

never hid her employment from petitioner, and in fact petitioner

helped Ms. Becherer perform some of her employment duties.

Petitioner had the opportunity to review the 1996 Federal income

tax return before it was filed.

     A purpose of section 6015 relief “is to protect one spouse

from the overreaching or dishonesty of the other.” Purcell v.

Commissioner, 826 F.2d 470, 475 (6th Cir. 1987), affg. 86 T.C.

228 (1986).   The understatement of tax in this case is

attributable to an omission of income from the employment

activities of petitioner’s former spouse.   Petitioner had

knowledge of Ms. Becherer’s employment activities.   Under these

circumstances, we perceive no inequity in holding petitioner and

Ms. Becherer to joint and several liability.   Bokum v.

Commissioner, 992 F.2d 1132, 1135 (11th Cir. 1993), affg. 94 T.C.

126 (1990); McCoy v. Commissioner, 57 T.C. 732, 735 (1972).

     We conclude that holding petitioner liable for the

deficiencies in tax for 1996 is not inequitable under section
                                - 8 -

6015(b).   Accordingly, petitioner is not entitled to relief

pursuant to section 6015(b).

II.   Relief Under Section 6015(c)

      Section 6015(c) allows a taxpayer, who is eligible and so

elects, to limit his or her liability to the portion of a

deficiency that is properly allocable to the taxpayer as provided

in section 6015(d).    Sec. 6015(c)(1).   Under section

6015(d)(3)(A), generally, any item that gives rise to a

deficiency on a joint return shall be allocated to the

individuals filing the return in the same manner as it would have

been allocated if the individuals had filed separate returns for

the taxable year.    We consider whether petitioner’s claim for

relief is precluded by the “actual knowledge” provisions of

section 6015(c)(3)(C).

      Relief under section 6015(c) is not available if the

Commissioner proves by a preponderance of the evidence that

petitioner had actual knowledge of “any item giving rise to a

deficiency.”   Culver v. Commissioner, 116 T.C. 189, 194 (2001).

The knowledge standard for purposes of section 6015(c)(3)(C) is

“an actual and clear awareness (as opposed to reason to know) of

the existence of an item which gives rise to the deficiency (or

portion thereof).”    Cheshire v. Commissioner, 115 T.C. at 195.

In omitted income cases, the electing spouse “must have an actual

and clear awareness of the omitted income.”     Id. at 204 n.2.
                               - 9 -

     Petitioner knew of Ms. Becherer’s employment with TTC

Illinois, Trader Publications, and Pennysaver.   The three items

of her income from such employment were omitted from the 1996

return.   Petitioner aided Ms. Becherer in performing her

employment duties for Trader Publications and Pennysaver.

Petitioner also knew of Ms. Becherer’s employment with TTC

Illinois.   Petitioner therefore had an actual and clear awareness

of the existence of the items that gave rise to the deficiency.

Consequently, relief under section 6015(c) is unavailable to

petitioner.

III. Relief Under Section 6015(f)

     Respondent argues that he did not abuse his discretion in

denying petitioner equitable relief under section 6015(f).

Respondent’s denial of relief is reviewed under an abuse of

discretion standard.   Cheshire v. Commissioner, 115 T.C. at 198;

Butler v. Commissioner, 114 T.C. at 292.

     Considering the facts and circumstances of this case, we

held under section 6015(b)(1)(D) that it is not inequitable to

hold petitioner liable for the deficiencies.   The language of

section 6015(f)(1), “taking into account all the facts and

circumstances, it is inequitable to hold the individual liable

for any unpaid tax or any deficiency (or any portion of either)”

does not differ significantly from the language of section

6015(b)(1)(D), “taking into account all the facts and
                              - 10 -

circumstances, it is inequitable to hold the other individual

liable for the deficiency in tax for such taxable year

attributable to such understatement”.4   Butler v. Commissioner,

supra at 291.   Further, the equitable factors we consider under

section 6015(b)(1)(D) are the same equitable factors we consider

under section 6015(f).5   As a result, we hold that respondent did

not abuse his discretion in denying petitioner relief under

section 6015(f) for the taxable year 1996.

     On the basis of all the facts and circumstances, we conclude

that respondent did not abuse his discretion in denying

petitioner relief pursuant to section 6015(f).




     4
        Additionally, the language in both sections is similar to
the language in former sec. 6013(e)(1)(D), “taking into account
all the facts and circumstances, it is inequitable to hold the
other spouse liable for the deficiency in tax for such taxable
year attributable to such substantial understatement”. Butler v.
Commissioner, 114 T.C. 276, 291 (2000); see Mitchell v.
Commissioner, 292 F.3d 800, 806 (D.C. Cir. 2002) (“Subsection (f)
has no statutory antecedent as a stand alone provision, but has
roots in the equity test of former subparagraph 6013(e)(1)(D)
carried forward into subparagraph 6015(b)(1)(D).”), affg. T.C.
Memo. 2000-332.
     5
        The Commissioner has announced a list of factors in Rev.
Proc. 2000-15, sec. 4.03, 2000-1 C.B. 447, 448, that the
Commissioner will consider in deciding whether to grant equitable
relief under sec. 6015(f). The revenue procedure takes into
account factors such as marital status, economic hardship, and
significant benefit in determining whether relief will be granted
under sec. 6015(f). Rev. Proc. 2000-15, sec. 4.03, 2000-1 C.B.
at 448.
                        - 11 -

To reflect the foregoing,


                                  An appropriate order and

                             decision will be entered.
