                   T.C. Summary Opinion 2005-100



                      UNITED STATES TAX COURT



                   DWAN A. THOMAS, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 15322-04S.            Filed July 21, 2005.


     Dwan A. Thomas, pro se.

     Miriam C. Dillard, for respondent.



     DEAN, Special Trial Judge:     This is a case arising under

sections 6015 and 7463, as in effect at the time the petition was

filed.   Unless otherwise indicated, subsequent section references

are to the Internal Revenue Code, and all Rule references are to

the Tax Court Rules of Practice and Procedure.     The decision to

be entered is not reviewable by any other court, and this opinion

should not be cited as authority.
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     Respondent determined petitioner was not entitled to relief

from joint and several liability for a $6,450 underpayment of tax

for tax year 2000 pursuant to section 6015.   The issue for

decision is whether respondent abused his discretion by denying

petitioner’s request for relief from joint and several liability

under section 6015 for the 2000 underpayment of tax.

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

The stipulation of facts and the exhibits received into evidence

are incorporated herein by reference.    At the time the petition

was filed with the Court, petitioner resided in Jacksonville,

Florida.

                            Background

     Petitioner was married to Shannon R. Flowers (Mr. Flowers),

and one child was born during the marriage.   They were legally

married during 2000, but divorced in 2002.

     Petitioner is a college graduate with a bachelor of science

degree in health information management.   During 2003, she was

enrolled in a master of business administration program at

Webster University.   During 2000, petitioner was employed as a

director with Shands Jacksonville.

     Mr. Flowers was a high school graduate in 2000 with some

college coursework.   He worked in automotive sales.

     Respondent assessed a $6,450 deficiency due to a

mathematical or clerical error adjustment to the 2000 return.
                                 - 3 -

See sec. 6213(b)(1).   Respondent later reduced the amount of tax

due to $4,199 because of the application of $2,251 of withholding

credits from Mr. Flowers, which credits were not reported on the

2000 return or credited when the math error adjustment was made.

     The tax liability for 2000 arose from a miscalculated

dependent care credit.   Petitioner and Mr. Flowers timely filed a

joint Form 1040, U.S. Individual Income Tax Return, reflecting

wages of $80,933 and withholding credits of $5,239.    Attached to

the return was Form 2441, Child and Dependent Care Expenses, on

which petitioner reported that she had paid child care expenses

of $1,080 and claimed a credit of $7,503.    It appears that

instead of multiplying the child care expenses by 20 percent,

petitioner calculated the credit by multiplying Mr. Flowers’s

earned income of $37,515 by 20 percent.

     Petitioner prepared the 2000 joint tax return herself and

reviewed it before signing it.    The return reflected an

overpayment of $693.

     During their marriage, petitioner and Mr. Flowers maintained

a joint checking account into which they both made deposits.

Petitioner opened the household mail and reviewed the bank

statements.   She acknowledged that she was generally aware of Mr.

Flowers’s finances as well as her own.    During her review of
                               - 4 -

their bank statements, petitioner discovered that Mr. Flowers had

hidden some withdrawals from her during the year.

     Respondent received from petitioner a Form 8857, Request for

Innocent Spouse Relief.   Petitioner also submitted to respondent

a completed Form 12510, Questionnaire for Requesting Spouse, in

which she provided a list of her monthly expenses.    Those

expenses total $4,185 and are as follows:

                 Rent                     $875
                 Food                      360
                 Utilities                 200
                 Telephone                 100
                 Auto Payments             585
                 Auto insurance             71
                 Auto fuel & repairs       200
                 Medical                   100
                 Clothing                  100
                 Credit card               300
                 Braces & eyeglasses       188
                 Tutoring                  956
                 Gas                       150

     Respondent determined petitioner was not entitled to relief

from joint and several liability for the understatement for tax

year 2000 pursuant to section 6015 because petitioner knew or had

reason to know of the item causing the understatement of tax, and

the item causing the understatement was partly attributable to

petitioner.

                             Discussion

     Generally, married taxpayers may elect to file a joint

Federal income tax return.   Sec. 6013(a).   After making the

election, each spouse is jointly and severally liable for the
                                - 5 -

entire tax due.   Sec. 6013(d)(3).   A spouse, however, may seek

relief from joint and several liability under section 6015.    To

obtain relief from liability, a spouse must qualify under section

6015(b), or if eligible, may allocate liability under section

6015(c).   In addition, if relief is not available under section

6015(b) or (c), a spouse may seek equitable relief under section

6015(f).   Fernandez v. Commissioner, 114 T.C. 324, 329-331

(2000); Butler v. Commissioner, 114 T.C. 276, 287-292 (2000).

The Court’s review of determinations under section 6015(f) is not

limited to the Commissioner’s administrative record.    Ewing v.

Commissioner, 122 T.C. 32, 44 (2004).

     Except as otherwise provided in section 6015, the taxpayer

bears the burden of proof.    Rule 142(a); Alt v. Commissioner, 119

T.C. 306, 311 (2002), affd. 101 Fed. Appx. 34 (6th Cir. 2004).

Section 6015(b) and (c)

     A taxpayer who satisfies all of the five requirements set

forth in section 6015(b), shall be relieved of liability for tax

(including interest, penalties, and other amounts) for such

taxable year to the extent such liability is attributable to such

understatement.   Sec. 6015(b)(1); Cheshire v. Commissioner, 282

F.3d 326, 332 (5th Cir. 2002), affg. 115 T.C. 183 (2000); Alt v.

Commissioner, supra at 313.    Alternatively, under section

6015(c), a taxpayer may receive proportionate relief through

allocation of a deficiency between individuals who filed a joint
                               - 6 -

return and who are no longer married, who are legally separated,

or who have been living apart for the preceding 12 months.

     Section 6015(b) mandates that the understatement of tax be

attributable to erroneous items of the nonrequesting spouse.

Sec. 6015(b)(1)(B).   If the understatement is attributable to an

erroneous item of the taxpayer or to both the taxpayer and the

other individual filing the return, the taxpayer is not entitled

to relief under section 6015(b).   See, e.g., Bartak v.

Commissioner, T.C. Memo. 2004-83; Ellison v. Commissioner, T.C.

Memo. 2004-57; Doyel v. Commissioner, T.C. Memo. 2004-35.

On her Form 8857, petitioner indicated that the understatement of

tax was not due to erroneous items of her spouse.   The Court

concludes that petitioner has failed to satisfy the requirement

of section 6015(b)(1)(B).

     Further, the knowledge a taxpayer possesses about the items

underlying the liability could preclude relief under either or

both section 6015(b) or (c).   Under section 6015(b), if the

taxpayer fails to establish that in signing the return he or she

did not know, and had no reason to know, that there was such

understatement, relief will be denied.   Sec. 6015(b)(1)(C).

Relief under section 6015(c) will be denied to a taxpayer who had

actual knowledge of the item giving rise to the deficiency.     Sec.

6015(c)(3)(C).
                                - 7 -

       In the context of a disallowed deduction, “actual knowledge”

is present if the taxpayer had actual knowledge of the factual

circumstances which made the item unallowable as a deduction.

King v. Commissioner, 116 T.C. 198, 204 (2001).     Knowledge of the

tax consequences resulting from the factual circumstances is not

required.    Id. at 203-204.

       Petitioner admitted that she prepared the tax return and

calculated the dependent care credit.     The dependent care credit

petitioner claimed on the return was almost seven times greater

than the amount she actually paid for child care.     At trial,

petitioner conceded that her calculation was incorrect and that

the amount of the deduction she claimed did “not sound normal”.

Additionally, petitioner admitted that she reviewed the return

before signing it.

       The Court finds that petitioner had actual knowledge of the

item giving rise to the deficiency.     The Court concludes that

petitioner is not entitled to relief under section 6015(b) or

(c).

Section 6015(f)

       Section 6015(f) grants the Commissioner discretion to

relieve from joint and several liability an individual who files

a joint return.    Section 6015 provides, in pertinent part, as

follows:
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     SEC. 6015.     RELIEF FROM JOINT AND SEVERAL LIABILITY ON
                    JOINT RETURN.

     *          *          *        *        *         *         *

          (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 (or any portion of either);
            and

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

     the Secretary may relieve such individual of such liability.


     Because relief from the 2000 understatement is not available

to petitioner under section 6015(b) or (c), she has satisfied one

of the two prerequisites for relief under section 6015(f).

     The other prerequisite is that it is inequitable to hold the

individual liable for the unpaid tax, taking into consideration

all the facts and circumstances.     As contemplated by section

6015(f), the Commissioner has prescribed guidelines in Rev. Proc.

2000-15, sec. 4.02, 2000-1 C.B. 447, 448, to be used in

determining whether an individual qualifies for relief under that

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



     1
      Respondent’s determination is subject to Rev. Proc. 2000-
15, 2000-1 C.B. 447, which was in effect when respondent
evaluated petitioner’s request and when respondent issued the
notice of determination. Rev. Proc. 2000-15, supra, has been
superseded by Rev. Proc. 2003-61, 2003-32 C.B. 296, effective for
requests for relief filed on or after Nov. 1, 2003.
                               - 9 -

sets forth the threshold conditions that must be satisfied before

the Commissioner will consider a request for equitable relief

under section 6015(f).   Respondent does not dispute that

petitioner has satisfied those threshold conditions.

     A requesting spouse satisfying all the applicable threshold

conditions may be relieved of all or part of the liability under

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

circumstances, the IRS determines that it would be inequitable to

hold the requesting spouse liable for the liability.   Rev. Proc.

2000-15, sec 4.01, supra at 448.

     Rev. Proc. 2000-15, sec. 4.03(1) and (2), 2001-1 C.B. at

448-449, sets forth six positive and six negative factors that

are to be considered in determining whether to grant relief.    The

revenue procedure makes clear that no single factor is to be

determinative in any particular case, that all factors are to be

considered and weighed appropriately, and that the list of

factors is not intended to be exhaustive.

     The knowledge or reason to know factor, the economic

hardship factor, and the legal obligation to pay factor in Rev.

Proc. 2000-15, sec. 4.03(2)(b), (d), and (f), 2000-1 C.B. at 449,

respectively, are the opposites of the knowledge or reason to

know factor, the economic hardship factor, and the legal

obligation to pay factor in Rev. Proc. 2000-15, sec. 4.03(1)(d),

(b), and (e), respectively.   The attribution factor in Rev. Proc.
                                - 10 -

2000-15, sec. 4.03(2)(a) is substantially the opposite of the

attribution factor in Rev. Proc. 2000-15, sec. 4.03(1)(f).

Consequently, in the Court’s review of the Commissioner’s

determination denying relief under section 6015(f), the Court has

held that a finding with respect to the reason to know, economic

hardship, legal obligation, and attribution factors ordinarily

will weigh either in favor of or against granting equitable

relief under section 6015(f).    Ewing v. Commissioner, 122 T.C. at

45.   The Court has also held that a finding that a requesting

spouse did not receive a significant benefit from the item in

issue weighs in favor of granting relief under section 6015(f).

Id.   Finally, the Court treats evidence that the remaining

positive and negative factors are not applicable as evidence

weighing neither in favor of nor against granting equitable

relief (i.e., as neutral).   Id.

      The sole factor in favor of petitioner here is the factor of

marital status.   Petitioner and her former husband were divorced

in 2002.   The remaining factors that are applicable tend to weigh

against petitioner.   Petitioner caused the mathematical error on

the return, and she had knowledge of the actual amounts she paid

for child care.   Petitioner also derived a significant benefit

from her miscalculation in that the return reflected an

overpayment of $693 instead of an understatement of $6,450.

Finally, petitioner has failed to show that she would experience
                             - 11 -

economic hardship if relief from the liability were not granted.

     The Court finds, considering all the facts and

circumstances, that respondent did not abuse his discretion in

denying petitioner equitable relief from joint and severable

liability under section 6015(f).

     Reviewed and adopted as the report of the Small Tax Case

Division.

     To reflect the foregoing,

                                        Decision will be entered

                                   for respondent.
