                        T.C. Summary Opinion 2016-44



                        UNITED STATES TAX COURT



  CYNTHIA A. BULLOCK, Petitioner, AND BRIAN BULLOCK, Intervenor v.
       COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket No. 29221-13S.                       Filed August 17, 2016.



      Cynthia A. Bullock, pro se.

      Brian Bullock, pro se.

      Richard Charles Grosenick, Mark J. Miller, and Ellen French (student), for

respondent.


                               SUMMARY OPINION


      ASHFORD, Judge: This case was heard pursuant to the provisions of

section 7463 of the Internal Revenue Code in effect when the petition was
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filed.1 Pursuant to section 7463(b), the decision to be entered is not reviewable by

any other Court, and this opinion shall not be treated as precedent for any other

case. Petitioner seeks review under section 6015(e)(1) of respondent’s

determination that she is not entitled to relief from joint and several liability for

the 2009 taxable year with respect to a proposed income tax liability of $4,205

arising from unreported taxable wages, interest, and cancellation of debt.

      We hold that she is not entitled to relief from joint and several liability

under 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.

      Petitioner, Cynthia A. Bullock, resided in Wisconsin and intervenor, Brian

Bullock, petitioner’s former spouse, resided in Florida at the time the petition was

filed with the Court.

      Petitioner and intervenor married in 1992 and they remained married in

2009. From January 2009 to August 2009, petitioner and intervenor, together with


      1
      Unless otherwise indicated, all section references are to the Internal
Revenue Code in effect at all relevant times, and all Rule references are to the Tax
Court Rules of Practice and Procedure.
                                        -3-

their two minor daughters, were living in Florida. During that time petitioner was

employed at a Macy’s Department Store in Clearwater, Florida, and intervenor

was self-employed, working as a “D.J.” and videographer. In August 2009 the

family moved to Wisconsin when petitioner received a job transfer to a Macy’s

Department Store in Wisconsin, where she had relatives. Intervenor did not have

employment in Wisconsin and was forced to return to Florida, while continuing to

try to find employment in Wisconsin so that he could eventually rejoin the family.

During 2009 petitioner’s job at Macy’s was the main source of income for the

family.

      During the marriage intervenor managed the family’s finances, including

paying the bills and filing the tax returns. To that end, with respect to the 2009

joint Federal income tax return (joint return), in early 2010, when petitioner

received in Wisconsin two Forms W-2, Wage and Tax Statement, she simply

mailed them to intervenor without reviewing them. As a result, she did not

confirm whether these two Forms W-2 reflected all of her wages and taxes

withheld from her employment with Macy’s in Wisconsin, as well as in Florida,

for 2009, or whether she was missing any Forms W-2 for 2009. According to

petitioner, she reminded intervenor several times that she was going to have

“Florida and Wisconsin W-2s” for 2009. The two Forms W-2 petitioner mailed to
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intervenor, and no other, were used to report petitioner’s wage income on the joint

return, which was prepared by the same accountant intervenor had hired to prepare

the joint Federal income tax returns for all the years that petitioner and intervenor

were together.

      Once the joint return was prepared, intervenor mailed it to petitioner in

Wisconsin for her signature. Although she could have, petitioner did not review

the joint return for correctness; rather, she simply signed it in the appropriate

places, which intervenor had marked with flags. Thus, petitioner did not check

whether the joint return reflected all of her wages and tax withheld from her

employment with Macy’s in 2009 (whether in Wisconsin or Florida), or whether

any other reportable income items may have been missing from the joint return.

After signing the return, she mailed it back to intervenor to file.

      The joint return reflected a tax refund; and when the refund check, which

was made out to petitioner and intervenor, was received by intervenor in Florida,

he mailed it to petitioner to endorse and return to him so that he could cash it. She

did so. Around this same time petitioner decided that she wanted a divorce

because the marriage was irrevocably broken and it had been so for several years.

Upon cashing the refund check, intervenor sent petitioner half of the proceeds

minus the cost of filing for divorce.
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         On December 27, 2010, respondent sent to petitioner and intervenor at their

Florida address a notice proposing an income tax increase against them of $4,493

for the 2009 taxable year. The basis for the proposed increase was that certain

income and payment information reported by third parties to respondent differed

from the amounts shown on the joint return. The notice listed the following

discrepancies, relating to tax withheld, interest, taxable wages and cancellation of

debt:

                                                                Amount        Amount
                                                              reported to    included
  Item                            Received        Account     respondent       on the
   No.                 Issue        from        information    by others    joint return


   1        Tax withheld       Macy’s, Inc.     Form W-2         $138           ---

   2        Tax withheld       Macy’s, Inc.     Form W-2          122           ---
   3        Tax withheld       Macy’s, Inc.     Form W-2          509           ---
             Tax withheld
              total                                               769          $260
   4        Interest           Wachovia         Form 1099-
                                Bank, N.A.      INT                 25           -0-
             Interest total                                         25           -0-
   5        Taxable wages      Macy’s, Inc.     Form W-2        13,258           -0-
             Taxable wages
              total                                             13,258           -0-
   6        Cancellation       Bank of          Form
             of debt            America, N.A.   1099-C           3,677          ---
                                         -6-


    7      Cancellation        Bank of          Form
            of debt             America, N.A.    1099-C       1,444             ---
              Cancellation
               of debt total                                  5,121             -0-

The evidentiary record is silent as to whether petitioner or intervenor responded to

the notice.

        Petitioner and intervenor divorced on August 16, 2011. At trial petitioner

testified that she had no knowledge that she and intervenor had underreported their

income on the joint return until November 2011, when she first received a letter

from respondent to that effect. Petitioner also testified that upon receiving the

letter, she contacted Macy’s and was told that a third Form W-2 for 2009 was

issued to her at her Florida address reflecting wages and tax withheld from her

employment with Macy’s in Clearwater, Florida. According to petitioner, she did

not receive this Form W-2, nor did intervenor ever mention it or forward it to her.

At trial petitioner described intervenor as controlling, but never physically

abusive, and uncooperative during the divorce proceedings.

        Petitioner further acknowledged that with intervenor’s not working for

extended periods, she relied on a Bank of America credit card solely in her name

to pay the family’s living expenses, such as groceries, and that in 2009, because
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the outstanding amount of debt on the credit card was insurmountable, she worked

out a settlement with Bank of America resulting in a cancellation of the debt.

Petitioner provided no testimony regarding receipt of the Form 1099-C,

Cancellation of Debt, issued by Bank of America reporting $5,121 of cancellation

of debt or why this amount was not reported on the joint return. Petitioner also

acknowledged having a bank account with Wachovia Bank; but she provided no

documentation to establish that the account was a joint account, and she similarly

provided no testimony regarding receipt of the Form 1099-INT, Interest Income,

issued by Wachovia Bank reporting $25 of interest or why this amount was not

reported on the joint return.

       On September 13 and November 1, 2012, intervenor and petitioner

respectively filed Forms 8857, Request for Innocent Spouse Relief. At some point

before March 12, 2013, respondent determined that intervenor was entitled to full

relief and that petitioner was not entitled to either full or partial relief. Petitioner

submitted to respondent a Statement of Disagreement, dated March 25, 2013,

appealing the determination against her. On October 1, 2013, respondent’s Office

of Appeals issued a final notice of determination to petitioner denying relief from

joint and several liability.
                                         -8-

      On December 16, 2013, petitioner timely filed a petition with this Court

seeking review of respondent’s determination. Pursuant to section 6015(e)(4) and

Rule 325, intervenor filed a timely notice opposing petitioner’s request for relief.

                                      Discussion

      Generally, married taxpayers may elect to file a joint Federal income tax

return. Sec. 6013(a). If a joint return is made, the tax is computed on the spouses’

aggregate income, and each spouse is fully responsible for the accuracy of the

return and is jointly and severally liable for the entire amount of tax shown on the

return or found to be owing. Sec. 6013(d)(3); Butler v. Commissioner, 114 T.C.

276, 282 (2000). Nevertheless, under certain circumstances, a spouse who has

made a joint return may seek relief from joint and several liability under

procedures set forth in section 6015. Sec. 6015(a). Section 6015 provides a

spouse with three alternatives: (1) full or partial relief under subsection (b), (2)

proportionate relief under subsection (c), and (3) if relief is not available under

subsection (b) or (c), equitable relief under subsection (f).

      In this case, respondent evaluated petitioner’s entitlement to relief from

joint and several liability under each alternative, and we have jurisdiction to do the

same. See sec. 6015(e)(1). In doing so, we apply a de novo standard of review, as

well as a de novo scope of review. Porter v. Commissioner, 132 T.C. 203, 210
                                        -9-

(2009). Petitioner bears the burden of proving that she is entitled to relief under

section 6015. See Rule 142(a); Porter v. Commissioner, 132 T.C. at 210; Alt v.

Commissioner, 119 T.C. 306, 311 (2002), aff’d, 101 F. App’x 34 (6th Cir. 2004);

Stergios v. Commissioner, T.C. Memo. 2009-15.

A.    Relief Under Section 6015(b)

      In order to be entitled to relief under section 6015(b), the spouse who

requests that relief (requesting spouse) must satisfy the following conditions: (1) a

joint return has been made for a taxable year; (2) on such return there is an

understatement of tax attributable to erroneous items of the nonrequesting spouse;

(3) the requesting spouse did not know and had no reason to know of the

understatement at the time the return was signed; (4) taking into account all facts

and circumstances, it is inequitable to hold the requesting spouse liable for that

year’s deficiency in tax attributable to such understatement; and (5) the requesting

spouse timely elects relief under section 6015(b). Sec. 6015(b)(1). These

conditions are stated in the conjunctive, and thus a failure to meet any one of them

precludes the requesting spouse from being entitled to relief under section

6015(b). Alt v. Commissioner, 119 T.C. at 311; McClelland v. Commissioner,

T.C. Memo. 2005-121, slip op. at 9. In this case, petitioner filed a joint Federal
                                        - 10 -

income tax return for 2009 and timely filed a request for relief, but on the basis of

the existing record she plainly cannot satisfy the second condition.

      The second condition under section 6015(b) requires the requesting spouse

to show that the understatement of tax is attributable to erroneous items of the

other spouse. Sec. 6015(b)(1)(B). An “erroneous item” is “any item resulting in

an understatement or deficiency in tax to the extent that such item is omitted from,

or improperly reported (including improperly characterized) on an individual

income tax return.” Sec. 1.6015-1(h)(4), Income Tax Regs. Furthermore, an

erroneous item is generally attributed to the individual whose activities gave rise

to the item. See id. para. (f)(1).; see also Agudelo v. Commissioner, T.C. Memo.

2015-124, at *14; Work v. Commissioner, T.C. Memo. 2014-190, at *12; sec.

1.6015-3(d)(2)(iii), Income Tax Regs.

      Here, there were three erroneous items: the unreported wage income from

Macy’s in Clearwater, Florida, interest income from a Wachovia bank account,

and cancellation of debt from settling an outstanding credit card debt with Bank of

America. The facts in the record demonstrate that these erroneous items are

attributable solely to petitioner. Indeed, petitioner’s position in this regard has

never wavered; at trial, she reiterated that all of the Macy’s wage income was hers

and acknowledged that the Bank of America credit card and the Wachovia bank
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account were in her name, thereby making the cancellation of debt and the interest

income attributable to her.

      Because petitioner has failed to satisfy the second condition under section

6015(b), we need not decide whether she satisfied the other two conditions under

section 6015(b), i.e., whether she lacked the requisite knowledge of the

understatement at the time she signed the joint return and whether equity

considerations favor her. Accordingly, petitioner is not entitled to relief under

section 6015(b).

B.    Relief Under Section 6015(c)

      Subject to other conditions, section 6015(c) allows a divorced or separated

spouse to elect to limit his or her liability for a deficiency assessed with respect to

a joint return to the portion of such deficiency allocable to him or her under

subsection (d). Pursuant to section 6015(d)(3)(A), “any item giving rise to a

deficiency on a joint return shall be allocated to 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.” Further, “[e]rroneous items of income are allocated

to the spouse who was the source of the income.” Sec. 1.6015-3(d)(2), Income

Tax Regs; see also Agudelo v. Commissioner, at *16.
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      In this case, while petitioner and intervenor have been divorced since

August 16, 2011, petitioner was the source of the erroneous items that led to the

deficiency, and thus these items would be allocable to petitioner if she and

intervenor had filed separate returns at the time. As a result, section 6015(c)

affords her no relief.

C.    Relief Under Section 6015(f)

      Where relief is not available under section 6015(b) or (c), section 6015(f)

grants respondent the discretion to relieve a requesting spouse of joint liability if,

taking into account all the facts and circumstances, it would be inequitable to hold

the requesting spouse liable for the unpaid tax or deficiency or any portion thereof.

Additionally, section 6015(f) authorizes granting such equitable relief “[u]nder

procedures prescribed by the Secretary”. For requests filed on or after September

16, 2013, and for requests pending in any Federal court on or after September 16,

2013, Rev. Proc. 2013-34, 2013-43 I.R.B. 397, prescribes the guidelines that

respondent will consider in determining whether equitable relief is appropriate.

Although we are not bound by them, since this case was filed and pending after

September 16, 2013, we will analyze petitioner’s request under these guidelines to

ascertain whether she satisfies the requirements for relief under section 6015(f).
                                         - 13 -

See Agudelo v. Commissioner, at *17-*18; Work v. Commissioner, T.C. Memo.

2014-190, at *22.

      The revenue procedure begins by establishing threshold conditions that a

requesting spouse must satisfy to be eligible for equitable relief. The threshold

conditions are: (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

section 6015(b) or (c); (3) the claim for relief is timely filed; (4) no assets were

transferred between the spouses as part of a fraudulent scheme; (5) the

nonrequesting spouse did not transfer disqualified assets to the requesting spouse;

(6) the requesting spouse did not knowingly participate in the filing of a fraudulent

tax return; and (7) absent certain enumerated exceptions, the tax liability from

which the requesting spouse seeks relief is attributable to an item of the

nonrequesting spouse. Rev. Proc. 2013-34, sec. 4.01, 2013-43 I.R.B. at 399-400.

These conditions, like the conditions under section 6015(b), are stated in the

conjunctive; thus, a requesting spouse must satisfy all seven of them before relief

may be granted. Agudelo v. Commissioner, at *18.

      Petitioner meets the first six threshold conditions, but does not satisfy the

seventh condition. Generally, the income tax liability from which the requesting

spouse seeks relief must be attributable, either in full or in part, to an item of the
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nonrequesting spouse or an underpayment resulting from the nonrequesting

spouse’s income, unless a specified exception applies. See Rev. Proc. 2013-34,

sec. 4.01(7), 2013-43 I.R.B. at 399-400. If the liability is partially attributable to

the requesting spouse, then relief can be considered only for the portion of the

liability attributable to the nonrequesting spouse. Id. As explained supra, the

entire liability at issue here is attributable to petitioner, not intervenor. And while

there are certain enumerated exceptions to the seventh threshold condition,2 on the

basis of the existing record none are applicable here. Accordingly, petitioner is

not entitled to relief under section 6015(f).

                                      Conclusion

      Petitioner is not entitled to relief under section 6015(b), (c), or (f) for 2009.

Relief under section 6015 hinges on attributing the income tax liability, which in

this case, as petitioner admits, is entirely attributable to her. Petitioner cannot be

granted relief under section 6015 just because she did not review the joint return

and her income was used to support intervenor and their children in 2009.




      2
       The exceptions are: (1) attribution solely due to the operation of
community property law, (2) nominal ownership, (3) misappropriation of funds,
(4) abuse, and (5) fraud committed by the nonrequesting spouse. Rev. Proc.
2013-34, sec. 4.01(7), 2013-43 I.R.B. 397, 399-400.
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      We have considered all of the arguments made by the parties and, to the

extent they are not addressed herein, we find them to be moot, irrelevant, or

without merit.

      To reflect the foregoing,

                                                Decision will be entered for

                                      respondent.
