                        T.C. Memo. 2004-261



                      UNITED STATES TAX COURT



                  MARY A. GEORGE, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 2380-03.             Filed November 16, 2004.


     Mary A. George, pro se.

     Brianna J. Basaraba, for respondent.



                        MEMORANDUM OPINION


     WELLS, Judge:   Respondent determined that petitioner was not

entitled to equitable relief pursuant to section 6015(f) for

petitioner’s 1994, 1995, 1996, 1997, 1998, and 1999 tax years.1

The issue to be decided is whether respondent’s denial of


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

petitioner’s request for equitable relief pursuant to section

6015(f) was an abuse of discretion.

     The parties have submitted the instant case fully

stipulated, without trial, pursuant to Rule 122.     The parties’

stipulations of fact are incorporated herein by reference and are

found as facts in the instant case.

     At the time of filing her petition, petitioner resided in

Atlanta, Georgia.

     During the years in issue, petitioner was married to James

George.   Both petitioner and Mr. George held master’s degrees.

Petitioner was employed as a school teacher, and Mr. George was

employed by Georgia Power Company.     In addition to his regular

employment, Mr. George entered a business venture in 1998 to

build and sell single-family homes.

     Petitioner and Mr. George failed to timely file income tax

returns for 1994, 1995, 1996, 1997, and 1998.     Mr. George,

however, periodically told petitioner that he had timely filed

the tax returns for those years and had paid the related tax

liabilities, and respondent concedes that petitioner believed Mr.

George had done so.

     Mr. George died in October of 1999, and petitioner was

appointed to represent Mr. George’s estate.     While assembling

financial records of the estate, petitioner discovered that tax

returns for 1994 through 1998 had not been filed.     Therefore,
                                 - 3 -

petitioner hired an accountant to prepare such returns.        Joint

returns for 1994, 1995, 1996, and 1997 were signed by petitioner

on March 14, 2000, and received by respondent on March 21, 2000,

and a joint return for 1998 was signed by petitioner on March 14,

2000, and received by respondent on March 20, 2000.      The

accountant also prepared a joint return for 1999, which

petitioner timely filed.     The foregoing joint tax returns,

collectively referred to as the returns, showed the following

amounts due for the respective years:

                  Tax Year               Tax Liability

                   1994                      $8,119
                   1995                        7,862
                   1996                      10,037
                                             1
                   1997                        4,447
                   1998                      19,488
                   1999                        3,740
     1
      Respondent subsequently corrected a math error and
increased the balance due for 1997 to $4,873.

No portion of the amounts shown as due on the returns was paid at

the time of filing.

     Respondent assessed petitioner’s Federal income taxes based

on the returns.    The sum of tax, penalties, and interest assessed

against petitioner for the years in issue exceeds $115,000.

     Respondent received from petitioner a Form 8857, Request for

Innocent Spouse Relief, and respondent denied that claim for

relief.   Subsequently, respondent denied a request for

reconsideration of respondent’s prior decision and forwarded the
                                 - 4 -

request to respondent’s Appeals Office.    Respondent’s Appeals

Office issued petitioner a Notice of Determination Concerning

Request for Relief Under the Equitable Relief Provisions of

Section 6015(f), again denying the requested relief.

     We must decide whether respondent’s denial of petitioner’s

request for equitable relief pursuant to section 6015(f) was an

abuse of discretion.   Under limited circumstances, a spouse may

qualify for relief from joint and several liability pursuant to

section 6015.

     In the instant case, petitioner reported the tax due but

failed to make timely payment.    Petitioner’s tax liability,

therefore, arises from neither an understatement nor a

deficiency.   Based on the foregoing, petitioner concedes that

relief is unavailable under either section 6015(b) or (c).

     Section 6015(f) authorizes the Secretary to relieve

taxpayers of joint and several liability where holding the

taxpayer liable would be inequitable and relief is unavailable

under subsections (b) and (c):

     Sec. 6015(f).   Equitable relief.--

          Under procedures prescribed by the Secretary, if–-

               (1) taking into account all the facts and
          circumstances, it is inequitable to hold the
          individual liable for any unpaid tax or any
          deficiency * * * and

               (2) relief is not available to such
          individual under subsection (b) or (c),
                                  - 5 -


     the Secretary may relieve such individual of such
     liability.

     Pursuant to the discretionary authority granted in section

6015(f), respondent has prescribed procedures, set forth in Rev.

Proc. 2000-15, 2000-1 C.B. 447, for determining whether a spouse

qualifies for equitable relief from joint and several liability.

We have previously applied Rev. Proc. 2000-15, supra, in

considering equitable relief requests pursuant to section

6015(f).    See, e.g., Jonson v. Commissioner, 118 T.C. 106, 125-

126 (2002), affd. 353 F.3d 1181 (10th Cir. 2003).      The record

demonstrates that respondent applied Rev. Proc. 2000-15, supra,

to evaluate petitioner’s application for equitable relief in the

instant case.

     We review respondent’s denial of petitioner’s claim for

equitable relief pursuant to section 6015(f) for abuse of

discretion.     Butler v. Commissioner, 114 T.C. 276, 291-292

(2000).    Consequently, we decide in the instant case whether

respondent acted arbitrarily, capriciously, or without sound

basis in fact in denying the requested relief.      Jonson v.

Commissioner, supra at 125.    Petitioner bears the burden of proof

as to whether respondent’s denial of such relief was an abuse of

discretion.    See Rule 142(a).    We are not limited to matters

contained in respondent’s administrative record when deciding the

issue.    Ewing v. Commissioner, 122 T.C. 32, 35-44 (2004).
                               - 6 -

     Rev. Proc. 2000-15, sec. 4.01, 2000-1 C.B. at 448, sets

forth seven threshold conditions2 that must be satisfied before

     2
      Section 4.   General Conditions for Relief

     .01 Eligibility to be considered for equitable relief. All
the following threshold conditions must be satisfied before the
Service will consider a request for equitable relief under
§ 6015(f). * * * The threshold conditions are as follows:

          (1) The requesting spouse filed a joint return for the
     taxable year for which relief is sought;

          (2) Relief is not available to the requesting spouse
     under § 6015(b) or 6015(c);

          (3) The requesting spouse applies for relief no later
     than two years after the date of the Service’s first
     collection activity after July 22, 1998, with respect to the
     requesting spouse;

          (4) Except as provided in the next sentence, the
     liability remains unpaid. A requesting spouse is eligible
     to be considered for relief in the form of a refund of
     liabilities for: (a) amounts paid on or after July 22,
     1998, and on or before April 15, 1999; and (b) installment
     payments, made after July 22, 1998, pursuant to an
     installment agreement entered into with the Service and with
     respect to which an individual is not in default, that are
     made after the claim for relief is requested;

          (5) No assets were transferred between the spouses
     filing the joint return as part of a fraudulent scheme by
     such spouses;

          (6) There were no disqualified assets transferred to
     the requesting spouse by the nonrequesting spouse. If there
     were disqualified assets transferred to the requesting
     spouse by the nonrequesting spouse, relief will be available
     only to the extent that the liability exceeds the value of
     such disqualified assets. For this purpose, the term
     “disqualified asset” has the meaning given such term by §
     6015(c)(4)(B); and


                                                   (continued...)
                               - 7 -

the Secretary will consider any request for equitable relief

pursuant to section 6015(f).   In the instant case, respondent

concedes that petitioner satisfied the seven threshold

conditions.

     Rev. Proc. 2000-15, sec. 4.02, 2000-1 C.B. at 448, provides

that equitable relief will ordinarily be granted if the seven

threshold conditions and each of the following three elements

(collectively referred to hereinafter as the three elements) are

satisfied:

          (a) At the time relief is requested, the
     requesting spouse is no longer married to, or is
     legally separated from, the nonrequesting spouse, or
     has not been a member of the same household as the
     nonrequesting spouse at any time during the 12-month
     period ending on the date relief was requested [the
     first element];

          (b) At the time the return was signed, the
     requesting spouse had no knowledge or reason to know
     that the tax would not be paid. The requesting spouse
     must establish that it was reasonable for the
     requesting spouse to believe that the nonrequesting
     spouse would pay the reported liability. If a
     requesting spouse would otherwise qualify for relief
     under this section, except for the fact that the
     requesting spouse had no knowledge or reason to know of
     only a portion of the unpaid liability, then the
     requesting spouse may be granted relief only to the
     extent that the liability is attributable to such
     portion [the second element]; and

          (c) The requesting spouse will suffer economic
     hardship if relief is not granted. For purposes of
     this section, the determination of whether a requesting

     2
      (...continued)
          (7) The requesting spouse did not file the return with
     fraudulent intent.
                                - 8 -

     spouse will suffer economic hardship will be made by
     the Commissioner or the Commissioner’s delegate, and
     will be based on rules similar to those provided in
     § 301.6343-1(b)(4) of the Regulations on Procedure and
     Administration [the third element].

Respondent concedes that petitioner satisfied the first element

because Mr. George was deceased at the time petitioner requested

relief.   The parties, however, dispute whether petitioner

satisfied the second and third elements.

     The second element is satisfied if the requesting spouse did

not know or have reason to know when the requesting spouse signed

the returns that the taxes would not be paid.   Accordingly,

petitioner must establish that it was reasonable for her to

believe that Mr. George would pay the reported liability.

     Petitioner contends that she did not know or have reason to

know when she signed the returns in 2000 that the taxes would not

be paid because she believed that Mr. George had settled the tax

liability prior to his death.   Petitioner further contends that

she believed that, even if Mr. George did not make the tax

payments as he had claimed, losses related to Mr. George’s

business venture of building and selling single-family homes

might have offset any taxable income.   Because Mr. George’s

records were incomplete, petitioner contends that she had no way

of knowing the extent of any such losses.

     Although petitioner signed the tax returns in 2000 with each

return showing an amount due, petitioner cites Wiest v.
                               - 9 -

Commissioner, T.C. Memo. 2003-91, in support of the proposition

that a taxpayer’s signature on a tax return submitted without

payment does not constitute constructive knowledge by such

taxpayer of an underpayment.   Petitioner contends that she did

not review the returns before signing them and that her signature

merely illustrates her knowledge that the returns needed to be

filed as soon as possible, as instructed by her accountant.

     Petitioner’s contention is without merit.    Petitioner had

reason to know at the time she signed the returns in 2000 that

taxes were due.   By signing the joint returns, petitioner is

charged with constructive knowledge of the amounts shown on the

returns as tax due.   Castle v. Commissioner, T.C. Memo. 2002-142.

Failure to review the returns prior to signing does not relieve

petitioner of responsibility for the stated liability.    See id.

     Additionally, petitioner knew or had reason to know that the

tax liabilities reported in 2000 on her tax returns would not be

paid.   In that regard, petitioner’s reliance on Wiest v.

Commissioner, supra, is misplaced.     In Wiest, we held that the

spouse requesting relief could reasonably have expected the

nonrequesting spouse to pay the tax liability where the

nonrequesting spouse had already assumed responsibility for

preparing and filing the return.   In the instant case, however,

after discovering that the returns for 1994 through 1998 had not

been filed, petitioner did not rely on her spouse to either
                              - 10 -

prepare or file the joint returns.     On the contrary, petitioner

had access to the couple’s records and directed the preparation

of the joint returns prior to her signing them.    Because Mr.

George was deceased at the time petitioner signed the returns in

2000, petitioner at that time could not have relied on her spouse

to pay the liability.   Furthermore, as the personal

representative of Mr. George’s estate, petitioner had reason to

know that the liability had not been paid by the estate of Mr.

George.

     After petitioner already had learned that Mr. George’s

statements to her with regard to his filing the returns were

false, petitioner could not have reasonably relied on statements

made by Mr. George that he had paid the tax liabilities.

Petitioner had significant education and access to the couple’s

financial records.   Additionally, petitioner could have but

apparently did not inquire with respondent as to whether Mr.

George had in fact made estimated tax payments.

     Based on the foregoing, we believe that petitioner knew or

had reason to know that the liability would not be paid.

     The third element is satisfied if the requesting spouse will

suffer economic hardship if relief is not granted.     The Secretary

is directed to base the determination of whether a requesting
                               - 11 -

spouse will suffer economic hardship on rules similar to those

provided in section 301.6343-1(b)(4), Proced. & Admin. Regs.3


     3
      (4) Economic hardship.

     (i) General rule. * * * This condition applies if
satisfaction * * * will cause an individual taxpayer to be unable
to pay his or her reasonable basic living expenses. The
determination of a reasonable amount for basic living expenses
will be made by the director and will vary according to the
unique circumstances of the individual taxpayer. Unique
circumstances, however, do not include the maintenance of an
affluent or luxurious standard of living.

     (ii) Information from taxpayer. In determining a reasonable
amount for basic living expenses the director will consider any
information provided by the taxpayer including –-

          (A) The taxpayer’s age, employment status and history,
     ability to earn, number of dependents, and status as a
     dependent of someone else;

          (B) The amount reasonably necessary for food, clothing,
     housing (including utilities, home-owner insurance, home-
     owner dues, and the like), medical expenses (including
     health insurance), transportation, current tax payments
     (including federal, state, and local), alimony, child
     support, or other court-ordered payments, and expenses
     necessary to the taxpayer’s production of income (such as
     dues for a trade union or professional organization, or
     child care payments which allow the taxpayer to be gainfully
     employed);

          (C) The cost of living in the geographic area in which
     the taxpayer resides;

          (D) The amount of property exempt from levy which is
     available to pay the taxpayer’s expenses;

          (E) Any extraordinary circumstances such as special
     education expenses, a medical catastrophe, or natural
     disaster; and

          (F) Any other factor that the taxpayer claims bears on
     economic hardship and brings to the attention of the
     director.
                                                   (continued...)
                                 - 12 -

     Petitioner contends that she will suffer economic hardship

if she is not granted relief pursuant to section 6015(f).

Respondent received from petitioner a questionnaire, Form 886-A,

in which petitioner reported that she was employed as a teacher,

with an annual salary of approximately $48,000.4           Petitioner also

reported on Form 886-A approximately $1,000 of annual income from

dividends and interest.5     Petitioner reported her current monthly

income on her Form 886-A as $3,500 and her current monthly


     3
     (...continued)
     (iii) Good faith requirement. In addition, in order to
obtain a release of a levy under this subparagraph, the taxpayer
must act in good faith. Examples of failure to act in good
faith include, but are not limited to, falsifying financial
information, inflating actual expenses or costs, or failing to
make full disclosure of assets.
     4
      The Dekalb County Board of Education reported the following
compensation to petitioner on Form W-2, Wage and Tax Statement
(W-2), for each of the years in question:

                 1994                     $39,128.29
                 1995                      41,969.06
                 1996                      43,429.00
                 1997                      44,947.00
                 1998                      47,823.60
                 1999                      48,572.22
     5
      On her joint returns for the years in question, petitioner
reported the following dividend and interest income:

                        Dividend Income        Interest Income

          1994                 $811                 $144
          1995                  589                   92
          1996                1,272                1,500
          1997                1,406                2,372
          1998                1,011               32,591
          1999                1,476                2,991
                                - 13 -

expenses as $3,775.     Petitioner’s stated monthly expenses

included the following:

          Monthly Expenses

          Mortgage payments                      $1,250
          Utilities                                 375
          Food                                      400
          Clothing                                  150
          Vehicle                                   250
          Entertainment                             200
          Insurance                                 150
          Charity                                   500
          Gifts, travel, miscellaneous              500
             Total                                3,775

     Petitioner notes that her situation has changed in several

respects since she submitted the Form 886-A.      Petitioner is no

longer employed.6   In lieu of the annual salary reported on the

Form 886-A, petitioner has received a monthly pension of $2,000

since her retirement.    Petitioner also states that she paid off a

second mortgage on her home.

     On June 3, 2003, petitioner provided respondent with

documentation regarding her assets.      Petitioner disclosed to

respondent a net worth of $315,000, including a $25,000 checking

account, a $250,000 IRA, and $45,000 of equity in her home.

Petitioner contends that full payment of the tax liabilities

would require a distribution of approximately $210,000 from her

IRA account, leaving a balance of approximately $100,000.



     6
      Petitioner states in petitioner’s brief that she is
considering a resumption of her teaching career.
                               - 14 -

     We conclude that satisfaction of the tax liabilities in

issue will not cause petitioner to be unable to pay reasonable

basic living expenses.   Although petitioner may not be currently

employed, she states in her brief that she is considering a

return to the workforce to resume her teaching career.7

Petitioner is well educated, and she has posited no reason why

she could not be expected to earn income comparable to her 1999

salary of $48,572.   Also, petitioner’s reasonable basic living

expenses are significantly less than the $3,775 listed on

petitioner’s Form 886-A.    In the absence of more detailed

itemization, we do not consider her monthly expenses of $200 for

entertainment, $500 for charity, and $500 for gifts and travel to

be basic living expenses.    Furthermore, petitioner’s mortgage

payments have presumably been reduced since petitioner paid off

the second mortgage on her home.

     Even if petitioner were to be unable to resume her

employment, we believe that petitioner could liquidate a portion

of the IRA inherited from Mr. George in order to pay her tax

liabilities without causing her to be unable to pay reasonable

basic living expenses.   The IRA provides petitioner with a

payment source independent of her compensation and retirement

pension.



     7
      Petitioner’s brief states that she is 55 years old.
                             - 15 -

     Therefore, we conclude that petitioner would not suffer

economic hardship if relief were not granted.

     Because petitioner does not satisfy each of the three

elements, petitioner does not qualify for relief pursuant to Rev.

Proc. 2000-15, sec. 4.02.

     Where the seven threshold conditions are satisfied but

relief is unavailable because the three elements are not

satisfied, the Secretary is authorized to grant relief if it

would be inequitable under the facts and circumstances to hold

the requesting spouse liable for the unpaid liability

(hereinafter, the facts and circumstances test).   Rev. Proc.

2000-15, sec. 4.03, 2000-1 C.B. at 448.   The facts and

circumstances test provides a partial list of positive and

negative factors to be taken into account in determining whether

to grant relief under section 6015(f).

     The facts and circumstances test provides the following

positive factors weighing in favor of relief:

          (1) Factors weighing in favor of relief. The
     factors weighing in favor of relief include, but are
     not limited to, the following:

               (a) Marital status. The requesting spouse is
          separated (whether legally separated or living
          apart) or divorced from the nonrequesting spouse
          [the marital status positive factor].


               (b) Economic hardship. The requesting spouse
          would suffer economic hardship (within the meaning
          of section 4.02(1)(c) of this revenue procedure)
                                 - 16 -

          if relief from the liability is not granted [the
          economic hardship positive factor].

               (c) Abuse. The requesting spouse was abused
          by the nonrequesting spouse, but such abuse did
          not amount to duress [the abuse positive factor].

               (d) No knowledge or reason to know. In the
          case of a liability that was properly reported but
          not paid, the requesting spouse did not know and
          had no reason to know that the liability would not
          be paid [the knowledge positive factor].

               (e) Nonrequesting spouse’s legal obligation.
          The nonrequesting spouse has a legal obligation
          pursuant to a divorce decree or agreement to pay
          the outstanding liability [the nonrequesting
          spouse’s legal obligation positive factor].

               (f) Attributable to nonrequesting spouse.
          The liability for which relief is sought is solely
          attributable to the nonrequesting spouse [the
          liability attribution positive factor].

     As to the marital status positive factor, petitioner’s

marital status weighs in favor of relief because Mr. George was

deceased at the time petitioner sought equitable relief.   The

economic hardship positive factor does not weigh in favor of

relief.   As stated above, we do not believe that petitioner would

suffer economic hardship if relief from the tax liabilities were

not granted.   The abuse positive factor does not weigh in favor

of relief.   On her Form 886-A, petitioner conceded that marital

abuse does not apply.

     The knowledge positive factor does not weigh in favor of

relief.   As stated above, we believe that petitioner knew or had
                              - 17 -

reason to know at the time of filing the tax returns in 2000 that

the tax liabilities would not be paid.

     The nonrequesting spouse’s legal obligation positive factor

does not weigh in favor of relief.     On her Form 886-A, petitioner

stated that neither petitioner nor Mr. George entered into any

enforceable agreements related to the payment of the tax

liabilities.

     The liability attribution positive factor does not weigh in

favor of relief.   Petitioner concedes that the liability for

which relief is sought is not solely attributable to Mr. George.

     The facts and circumstances test provides the following

negative factors weighing against relief:

          (2) Factors weighing against relief. The factors
     weighing against relief include, but are not limited
     to, the following:

               (a) Attributable to the requesting spouse.
          The unpaid liability or item giving rise to the
          deficiency is attributable to the requesting
          spouse [the liability attribution negative
          factor].

               (b) Knowledge, or reason to know. A
          requesting spouse knew or had reason to know of
          the item giving rise to a deficiency or that the
          reported liability would be unpaid at the time the
          return was signed [the knowledge negative factor].
          This is an extremely strong factor weighing
          against relief. Nonetheless, when the factors in
          favor of equitable relief are unusually strong, it
          may be appropriate to grant relief under § 6015(f)
          in limited situations where a requesting spouse
          knew or had reason to know that the liability
          would not be paid, and in very limited situations
          where the requesting spouse knew or had reason to
          know of an item giving rise to a deficiency.
                                  - 18 -

                (c) Significant benefit. The requesting
           spouse has significantly benefitted (beyond normal
           support) from the unpaid liability * * * [the
           significant benefit negative factor].

                (d) Lack of economic hardship. The
           requesting spouse will not experience economic
           hardship (within the meaning of section 4.02(1)(c)
           of this revenue procedure) if relief from the
           liability is not granted [the lack of economic
           hardship negative factor].

                (e) Noncompliance with federal income laws.
           The requesting spouse has not made a good faith
           effort to comply with federal income tax laws in
           the tax years following the tax year or years to
           which the request for relief relates [the tax law
           noncompliance negative factor].

                (f) Requesting spouse’s legal obligation.
           The requesting spouse has a legal obligation
           pursuant to a divorce decree or agreement to pay
           the liability [the requesting spouse’s legal
           obligation negative factor]. [Rev. Proc. 2000-15,
           sec. 4.03.]

     Regarding the liability attribution negative factor,

petitioner contends that the majority of the unpaid liability is

attributable to Mr. George.    In a letter to respondent dated July

27, 2001, petitioner’s representative stated that the aggregate

tax liability for the 6 years at issue should be allocated as

follows:

                     Mr. George      Petitioner     Combined

     Tax             $38,819         $13,382        $52,201
     Pen./Int.        30,761          12,127         42,888
         Total        69,580          25,509         95,089

Petitioner further contends that, if she had filed separate

rather than joint returns, her unpaid liability would total only
                              - 19 -

$7,500 for the 6 years in question.8    We conclude that

petitioner’s contention has no merit because petitioner filed

joint returns with Mr. George, and we must base our decision on

the actual facts of the instant case.    Consequently, because a

significant portion of the unpaid liability is attributable to

petitioner, the liability attribution negative factor weighs

against relief.

     The knowledge negative factor weighs against relief.    As

noted above, we believe that petitioner knew or had reason to

know that the reported liabilities would be unpaid at the time

petitioner signed the returns.

     The significant benefit negative factor weighs against

relief.   “Significant benefit” for purposes of section

6015(b)(1)(D) is defined in section 1.6015-2(d), Income Tax

Regs.:

          (d) Inequity. All of the facts and circumstances
     are considered in determining whether it is inequitable
     to hold a requesting spouse jointly and severally
     liable for an understatement. One relevant factor for
     this purpose is whether the requesting spouse
     significantly benefitted, directly or indirectly, from
     the understatement. A significant benefit is any
     benefit in excess of normal support. Evidence of
     direct or indirect benefit may consist of transfers of
     property or rights to property, including transfers
     that may be received several years after the year of
     the understatement. Thus, for example, if a requesting
     spouse receives property (including life insurance


     8
      Petitioner reaches this amount by subtracting withholding
of $3,750 from $4,250 of estimated annual tax liability and
adding penalties and interest.
                              - 20 -

     proceeds) from the nonrequesting spouse that is beyond
     normal support and traceable to items omitted from
     gross income that are attributable to the nonrequesting
     spouse, the requesting spouse will be considered to
     have received significant benefit from those items.[9]
     * * *

Petitioner contends that the only benefit she received from the

understatement was the estimated $750 tax for which she would

have been liable if she had filed separate rather than joint tax

returns.   We, however, do not believe that petitioner’s estimated

$750 annual benefit approximates the actual benefit she received

because petitioner filed joint returns.   Furthermore, petitioner

concedes that she received from Mr. George a pension of $250,000

(converted by petitioner into an IRA) and life insurance proceeds


     9
      Rev. Proc. 2000-15, 2000-1 C.B. 447, references sec.
1.6013-5(b), Income Tax Regs., for an explanation of “significant
benefit”. Sec. 1.6013-5(b), Income Tax Regs., effective at the
time Rev. Proc. 2000-15, 2000-1 C.B. at 447, was published but
subsequently replaced, is substantially similar to sec. 1.6015-
2(d), Income Tax Regs., which is currently in effect. Sec.
1.6013-5(b), Income Tax Regs., provided:

     normal support is not a significant “benefit” * * *.
     Evidence of direct or indirect benefit may consist of
     transfers of property, including transfers which may be
     received several years after the year in which the
     omitted item of income should have been included in
     gross income. Thus, for example, if a person seeking
     relief receives from his spouse an inheritance of
     property or life insurance proceeds which are traceable
     to items omitted from gross income by his spouse, that
     person will be considered to have benefitted from those
     items. Other factors which may also be taken into
     account, if the situation warrants, include the fact
     that the person seeking relief has been deserted by his
     spouse or the fact that he has been divorced or
     separated from such spouse.
                              - 21 -

of $150,000.   Petitioner could have used, but did not, these

resources to pay the liabilities.    Moreover, we note that, had

Mr. George paid the joint liabilities during his lifetime, the

funds petitioner received from Mr. George at his death would have

been reduced by those payments.    Consequently, petitioner

received a significant benefit beyond normal support.

     The lack of economic hardship negative factor weighs against

relief.   As noted above, we do not believe that petitioner will

experience economic hardship if relief is not granted.

     The tax law noncompliance negative factor weighs against

relief.   The record indicates that petitioner had not filed tax

returns for 2000 or 2001 as of April 20, 2002.

     The requesting spouse’s legal obligation negative factor

does not weigh against relief.    As noted above, petitioner did

not enter an agreement with Mr. George with regard to payment of

the liability.

     Taking into account all the facts and circumstances, we

conclude that it would not be inequitable to hold petitioner

liable for the unpaid liability.    Petitioner has not carried her

burden to establish that respondent’s denial of equitable relief

pursuant to section 6015(f) was an abuse of discretion.10     We

have considered all of petitioner’s arguments and contentions



     10
      That the facts of the instant case were fully stipulated
does not relieve petitioner of the burden of proof. Rule 149(b).
                             - 22 -

which are not discussed herein, and we find them to be without

merit or irrelevant.

     To reflect the foregoing,



                                      Decision will be entered for

                                 respondent.
