                         T.C. Memo. 2003-214



                       UNITED STATES TAX COURT



               CYNTHIA EMERY WEIGHT, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 6932-01.                Filed July 16, 2003.



     Jan R. Pierce, for petitioner.

     Robert V. Boeshaar, for respondent.



                         MEMORANDUM OPINION


     DAWSON, Judge:    This case was assigned to Special Trial

Judge Lewis R. Carluzzo pursuant to section 7443A(b)(5) and Rules

180, 181 and 183.1    The Court agrees with and adopts the opinion

of the Special Trial Judge, which is set forth below.


     1
        Section references are to the Internal Revenue Code of
1986, as amended. Rule references are to the Tax Court Rules of
Practice and Procedure.
                                 - 2 -

                OPINION OF THE SPECIAL TRIAL JUDGE

     CARLUZZO, Special Trial Judge:        In a final notice of

determination, dated March 8, 2001, respondent denied

petitioner’s claim for section 6015(f) relief from her unpaid

1996 Federal income tax liability.       In a timely petition, filed

May 24, 2001, petitioner requests this Court to review

respondent’s determination.    Our jurisdiction to do so is

established by section 6015(e), see Ewing v. Commissioner,

118 T.C. 494, 496-497 (2002), and we review respondent’s

determination for abuse of discretion, Butler v. Commissioner,

114 T.C. 276, 292-293 (2000).

                              Background

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

the time the petition was filed in this case, petitioner resided

in Hillsboro, Oregon.

     Petitioner and Ronald R. Weight were married on February 14,

1992, they separated in 1997, and were divorced by a Stipulated

Judgment of Dissolution of Marriage, effective February 26,

1998(the divorce decree).   They have one child, Aaron Cyrill

Weight.2   Petitioner also has at least one other child, Sarah C.

Weight, who presumably was a minor during 1996.       Mr. Weight is

not the father of Sarah C. Weight.       In 1998, Sarah C. Weight

     2
        In the divorce decree, the date of birth for this child
is listed as December 5, 1977. We assume that the reference to
1977 is an error.
                               - 3 -

sustained serious injuries when she fell off the horse she was

riding.   Since that time she has received and continues to

receive medical treatment for those injuries.

     Mr. Weight was hospitalized for a psychiatric disorder from

October 30 through November 20, 1996, and then again from

November 27 through December 3 of that year.    During the former

period of hospitalization, petitioner presented Mr. Weight with

a Hardship Withdrawal Request Form (the form) in which he

requested a $35,000 withdrawal (the distribution) from his Maxim

Integrated Products 401(K) Plan (the plan).    The form was signed

by Mr. Weight on November 17, 1996, and by the plan administrator

on November 27, 1996.

     According to a statement contained in the form, the

distribution was necessary “to prevent the foreclosure on the

mortgage of * * * [petitioner’s and Mr. Weight’s] principal

residence”.   The net proceeds of the distribution, that is

$25,200 ($35,000 minus Federal and State withholding taxes of

$9,800), were paid by check dated December 3, 1996.

     On December 14, 1996, a deposit of $20,276 was made into a

saving account held in trust for Sarah C. Weight (the savings

account).   Petitioner is the custodian of the savings account.

As best as can be determined from the record, the source of this

deposit was the proceeds from the distribution.
                                - 4 -

     During 1996, in addition to the distribution from the plan,

withdrawals totaling $31,700 were made from retirement accounts

held by petitioner or Ronald R. Weight.   It appears that these

withdrawals were used in connection with the purchase of a house

by petitioner and Mr. Weight.   Presumably, this house is the

“principal residence” referred to in the form.

     Petitioner’s Federal income tax return (the separate return)

was timely filed.   The separate return was prepared by a paid

income tax return preparer.   On the separate return, petitioner

listed her filing status as a head of household.   She claimed

dependency exemption deductions for Aaron Weight and Sarah

Weight.   She elected to itemize deductions and claimed deductions

for mortgage interest and real estate taxes in the amounts of

$10,476 and $2,165, respectively.   Deductions claimed exceed

income reported; consequently there is no section 1 income tax

liability reported on the return.   Taking into account an earned

income credit of $2,870 and withholdings, she claimed a refund of

$3,767, which she apparently received in due course.

      The divorce decree, which was issued after the separate

return had been filed, provides that petitioner and Mr. Weight

“shall jointly file 1996 State and Federal tax returns” and that

each “shall be responsible for one half of any liability owing on

those joint returns”.   In this regard, petitioner and Mr. Weight

filed an untimely joint Federal income tax return (the joint
                                - 5 -

return).   The joint return was prepared by the same paid income

tax return preparer who prepared the separate return.

Arrangements for the filing of the joint return were made by the

attorney representing petitioner in connection with her divorce

from Mr. Weight.   The income and deductions reported or claimed

on the separate return are reported or claimed on the joint

return.    In addition to other items, pension income of $66,700 is

reported on the joint return.   Most of the pension income is

attributable to Mr. Weight.   Respondent subtracted the refund

claimed on the separate return from the amount of withholding and

prepayment credits claimed on the joint return.3   The unpaid

income tax liability arising from the joint return is $15,536.

Interest of $3,568, a $3,496 “late filing penalty”, and a $1,584

“failure to pay tax penalty” were assessed after the return was

filed.

     Over the years, Mr. Weight and petitioner made payments

toward the income tax liability established by the joint return.

Without taking into account accrued but unassessed interest, as

of April 17, 2002, petitioner’s joint and several outstanding

1996 Federal income tax liability was $1,848.

     3
        Because a substantial portion of the refund claimed on
the separate return results from the earned income credit, that
portion of the refund is, in effect, recovered from withholding
credits attributable to Mr. Weight.
                               - 6 -

     Petitioner’s section 6015(f) administrative claim for relief

was made, presumably in writing, on August 8, 1999.    We cannot

tell what statements, allegations, specific claims, etc. were

made in her administrative claim because the document, if it

exists, has not been made part of the record.    Nevertheless, it

is clear from the petition, amended petition, second amended

petition, and statements made at trial by petitioner’s counsel

that petitioner’s claim for relief in this proceeding does not

include the refund of any payments previously made with respect

to her 1996 Federal income tax liability.

     As noted, petitioner’s administrative claim for section

6015(f) relief was denied by notice of final determination dated

March 8, 2001.   In that notice, respondent:   (1) Acknowledges

receipt of petitioner’s August 8, 1999, “request for innocent

spouse relief under section 6015(f)”; (2) advises petitioner that

respondent “cannot allow” petitioner’s claim and that, therefore,

“both persons who signed the joint return remain responsible for

paying the tax”; and (3) advises petitioner of her right to

petition this Court to request a review of respondent’s denial of

her claim.

                            Discussion

     In general, if a taxpayer elects to file a joint Federal

income tax return with his or her spouse, then the taxpayer and

the taxpayer’s spouse are jointly and severally liable for the
                               - 7 -

tax shown on the return or otherwise determined to be due.    Sec.

6013(d)(3); Cheshire v. Commissioner, 115 T.C. 183, 188 (2000),

affd. 282 F.3d 326 (5th Cir. 2002).    In certain situations and

subject to a variety of conditions, section 6015 provides for

relief from the joint and several liability that arises from a

joint return.

     If a taxpayer does not qualify for relief under subsection

(b) or subsection (c) of section 6015, then under procedures

prescribed in Rev. Proc. 2000-15, 2000-1 C.B. 447, the

Commissioner has discretionary authority to relieve the taxpayer

from joint and several liability for a particular year if,

“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)” for that year.    Sec.

6015(f).   Some of the factors the Commissioner will take into

account in considering a taxpayer’s claim for section 6015(f)

relief are specifically set forth in the above-referenced revenue

procedure.

     In this case, petitioner relies upon section 6015(f) in

support of her claim for relief from the balance of the unpaid

income tax liability arising from the joint return.    At trial,

petitioner indicated that the outstanding 1996 liability roughly

approximated the “late filing penalty” imposed pursuant to

section 6651(a)(1) and, for the most part, limited her claim to
                                - 8 -

relief from that “penalty”.    As petitioner views the situation,

she should not be liable for the “penalty” because her separate

return was timely filed.    Petitioner points out that the untimely

joint return was filed in accordance with the divorce decree4 and

under the circumstances it would be unfair to subject her to the

“penalty”.   According to petitioner, respondent’s refusal to

grant her relief from that “penalty” is an abuse of discretion.

     In order to establish that respondent’s denial of her

section 6015(f) claim for relief is an abuse of discretion, the

evidence must demonstrate that in not granting relief, the

Commissioner exercised his discretion arbitrarily, capriciously,

or without sound basis in law or fact.    Woodral v. Commissioner,

112 T.C. 19, 23 (1999).

     Petitioner was aware of the distribution and other pension

withdrawals that resulted in the unpaid income tax liability

reported on the joint return.    Proceeds from the distribution

were deposited into her daughter’s saving account, which

petitioner controlled.    The distribution and other pension

withdrawals were used to purchase and pay the mortgage on

petitioner’s house.   The joint return was prepared by the same

     4
        Petitioner argues that the joint return is not valid
because she did not make a “voluntary” election to file a
joint return with Mr. Weight. We note that the argument is
inconsistent with a claim for relief under section 6015, see
Raymond v. Commissioner, 119 T.C. 191 (2002), and, under the
circumstances, lacks sufficient merit to warrant further
consideration.
                                 - 9 -

person who prepared petitioner’s separate return, and

petitioner’s divorce attorney coordinated the filing of the joint

return.   Petitioner, therefore, either possessed actual knowledge

that a portion of the liability reported on that joint return was

not paid, or such knowledge is imputed to her.       The separate

return contains a number of errors that resulted in a refund to

petitioner to which she was not entitled.5       The refund that

petitioner received was, in effect, recaptured on the joint

return by reducing the amount of withholdings attributable to Mr.

Weight.   Set against the factors in Rev. Proc. 2000-15, supra,

the facts and circumstances of this case indicate that it would

not be inequitable to hold petitioner liable for the portion of

her 1996 Federal income tax liability that remains unpaid.

     To reflect the foregoing,

                                         Decision will be

                                 entered for respondent.




     5
        In her brief, petitioner acknowledges that the separate
return contains deductions to which she might not be entitled,
but she points out that the elimination of those deductions would
not increase her tax liability. Petitioner, however, ignores
that, because she was married as of the close of 1996, she was
not entitled to file as head of household. See sec. 2(b). Her
proper filing status for purposes of her separate return was
married filing separately. Consequently, she was not entitled to
the earned income credit. See sec. 32(d).
