                  T.C. Summary Opinion 2010-91



                     UNITED STATES TAX COURT



                  RONALD COLLIS, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 12663-09S.             Filed July 12, 2010.



     Ronald Collis, pro se.

     Jeffrey A. Schlei, for respondent.



     ARMEN, Special Trial Judge:   This case was heard pursuant to

the provisions of section 7463 of the Internal Revenue Code in

effect when the petition was filed.1   Pursuant to section

7463(b), the decision to be entered is not reviewable by any



     1
        Unless otherwise indicated, all subsequent 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 -

other court, and this opinion shall not be treated as precedent

for any other case.

     In a final notice of determination respondent denied

petitioner’s claim for section 6015 relief regarding joint and

several liability arising from the 2006 joint Federal income tax

return filed by petitioner and Christine Collis (Ms. Collis).

According to that notice, petitioner was not eligible for relief

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

whether petitioner is entitled to relief from joint and several

liability under section 6015.

                            Background

     Some of the facts have been stipulated, and they are so

found.   We incorporate by reference the parties’ stipulation of

facts and accompanying exhibits.   Petitioner resided in the State

of California when the petition was filed.

     Petitioner pled guilty to nine counts of embezzlement and

went to prison on January 7, 2007.2     After petitioner went to

prison, he and his then-wife, Ms. Collis, separated.     While

incarcerated and sometime before January 22, 2007, petitioner

wrote Ms. Collis a letter that stated in part:     “You can also

file our tax return electronically and will have about $6,000 7-



     2
        The record includes the IRS Appeals Transmittal and Case
Memo, which states that Ms. Collis learned at this time that this
was not petitioner’s first offense of embezzlement, a matter that
petitioner did not deny upon cross-examination at trial.
                                - 3 -

10 days after filing.”    Petitioner told Ms. Collis to have the

return prepared and where the tax information was located in

their home.

     Using all of the information received from petitioner, Ms.

Collis filed a joint return on February 7, 2007, reporting

$16,806 in wages and $151 of income tax withheld.    The return

failed to report the following amounts attributable to

petitioner:   Wages of $40,502; interest income of $76; and income

tax withheld of $4,614.    The return also failed to report wages

of $658 attributable to Ms. Collis.     Because the return did not

report the additional income, petitioner and Ms. Collis qualified

for an earned income credit and an additional child tax credit to

which they would not have been entitled if the additional income

had been reported.   The return claimed a refund of $5,573.

     When petitioner was released from custody in September 2007,

he contacted the Internal Revenue Service (IRS) to inquire about

the filing of his 2006 Federal income tax return.    The IRS sent

petitioner an account transcript indicating that the return had

been filed and had reported $16,806 of income.    Petitioner sent a

letter to the IRS dated September 26, 2007, in which he stated

that he did not sign the 2006 return and that the return

underreported his income.3


     3
        Although the letter refers to the 2007 Federal income tax
return, the Court assumes that reference was to the 2006 Federal
                                                   (continued...)
                                - 4 -

     On March 24, 2008, the IRS issued a notice of proposed

changes.   On May 16, 2008, petitioner submitted a Form 8857,

Request for Innocent Spouse Relief.     On his Form 8857 petitioner

states that he holds a master’s degree in business administration

with a focus on accounting and has taught Federal taxation at the

college level.    Petitioner also testified at trial that he was a

tax manager at a certified public accountant (C.P.A.) firm and

had his own C.P.A. firm for 23 years.

     In a notice of deficiency dated June 30, 2008, respondent

determined that petitioner and Ms. Collis had unreported income

and disallowed the earned income credit and the additional child

tax credit.    Petitioner did not file a petition in this Court in

respect of the notice of deficiency, ostensibly because he was

dealing at that time with the IRS’ Innocent Spouse Division and

Appeals Office.

     Respondent issued a Final Appeals Determination (final

determination) on March 19, 2009, denying petitioner’s request

for relief under section 6015(b), (c), and (f).    The final

determination denied petitioner’s request on the basis that

relief is not allowed on tax owed on petitioner’s own income and

petitioner did not show it would be unfair to hold him

responsible.   The evaluation of the Appeals Officer (AO) reveals



     3
      (...continued)
income tax return that was filed in 2007.
                               - 5 -

that petitioner stated in a conference call that he agreed to a

joint return and that he knew Ms. Collis was having the return

prepared.   The AO therefore concluded that petitioner consented

to the filing of a joint return.   The IRS tax examiner who

initially reviewed petitioner’s request also found that

petitioner intended to file a joint return.    In addition, the tax

examiner concluded that petitioner participated in the

preparation of the return because he told Ms. Collis where to

find the Forms W-2, Wage and Tax Statement, and other relevant

tax documents.

     At trial petitioner argued that the 2006 Federal income tax

return filed on February 7, 2007, was not a joint return, but if

it was a joint return that the deficiency should be allocated

between himself and Ms. Collis.

     Respondent contends that a joint return was filed and that

petitioner is not entitled to relief under section 6015.

                            Discussion

     A predicate to relief under section 6015 is that a joint

Federal income tax return was filed.     Sec. 6015(a)(1), (b)(1)(A),

(c)(1).   Accordingly, if the Court should find that petitioner

did not file a joint return, we would be required to deny

petitioner’s claim for relief under section 6015.     Raymond v.

Commissioner, 119 T.C. 191, 194-197 (2002).
                                - 6 -

     Generally, married taxpayers may elect to file a joint

Federal income tax return.   Sec. 6013(a).   In general, a joint

return must be signed by both spouses.    Sec. 1.6013-1(a)(2),

Income Tax Regs.   However, where both spouses intend to file a

joint return, the failure of one spouse to sign the return will

not preclude its treatment as a joint return.    Estate of Campbell

v. Commissioner, 56 T.C. 1, 12 (1971).    This is so even when the

purported signature of the nonsigning spouse is signed by

another, provided the couple had the intent to file jointly.

Heim v. Commissioner, 27 T.C. 270, 273-274 (1956), affd. 251 F.2d

44 (8th Cir. 1958); Magee v. Commissioner, T.C. Memo. 2005-263.

Whether or not the nonsigning spouse intended to file a joint

return is a question of fact.    Estate of Campbell v.

Commissioner, supra at 12; Federbush v. Commissioner, 34 T.C.

740, 755-758 (1960), affd. per curiam 325 F.2d 1 (2d Cir. 1963);

Heim v. Commissioner, supra at 273.

     Although petitioner did not sign the return that was filed

on February 7, 2007, the facts indicate that petitioner intended

to file a joint return with Ms. Collis.    Petitioner sent a letter

to Ms. Collis sometime before January 22, 2007, which letter

stated that she could file the tax return electronically.    In

addition, petitioner directed Ms. Collis to have the return

prepared and told her where the tax documents were located in

their home.   Therefore, we are satisfied that petitioner intended
                                - 7 -

to file, and thus did file, a joint Federal income tax return for

2006.

       After electing to file a joint Federal income tax return,

each spouse is jointly and severally liable for the entire tax

due.    Sec. 6013(d)(3); Butler v. Commissioner, 114 T.C. 276, 282

(2000).    If certain requirements are met, however, an individual

may be relieved of joint and several liability under section

6015.    Except as otherwise provided in section 6015, the taxpayer

bears the burden of proof to show his or her entitlement to

relief.    Rule 142(a); Alt v. Commissioner, 119 T.C. 306, 311

(2002), affd. 101 Fed. Appx. 34 (6th Cir. 2004).

       There are three types of relief available under section

6015.    In general, section 6015(b) provides full or apportioned

relief from joint and several liability, section 6015(c) provides

proportionate tax relief to divorced or separated taxpayers, and

in certain circumstances section 6015(f) provides equitable

relief from joint and several liability if relief is not

available under subsection (b) or (c).

A.   Section 6015(b)

       Under section 6015(b), a requesting spouse may be relieved

of joint and several liability from an understatement of tax to

the extent that the understatement was attributable to the

nonrequesting spouse.    The understatement on petitioner’s joint

return for 2006 is almost entirely attributable to his unreported
                                 - 8 -

income of $40,578.     With respect to the remaining unreported

income of $658 attributable to Ms. Collis, petitioner must

establish, inter alia, that he did not know and had no reason to

know that there was an understatement.     See sec. 6015(b)(1)(C).

      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 understatement.     Guth v. Commissioner, 897 F.2d

441, 444 (9th Cir. 1990), affg. T.C. Memo. 1987-522; Cheshire v.

Commissioner, 115 T.C. 183, 192-193 (2000), affd. 282 F.3d 326

(5th Cir. 2002).   Petitioner did not provide any evidence or

testimony demonstrating that he did not know and had no reason to

know of Ms. Collis’ unreported income; thus, he has failed to

satisfy section 6015(b)(1)(C).     Therefore, petitioner does not

qualify for relief from joint and several liability under section

6015(b).

B.   Section 6015(c)

      Under section 6015(c), if the requesting spouse is no longer

married to, is legally separated from, or was not a member of the

same household as the spouse with whom he filed the joint return

for the 12-month period before the request was filed, the

requesting spouse may elect to limit his liability for a

deficiency to that portion of the liability which is properly

allocable to him under section 6015(d).     At the time petitioner

filed his request on May 16, 2008, he and Ms. Collis had not been
                                - 9 -

members of the same household since petitioner was incarcerated

in January 2007.    Therefore, petitioner was eligible to elect

relief under section 6015(c) when he filed his request.

     Generally, items giving rise to a deficiency on a joint

return are allocated between spouses as if separate returns had

been filed.    Sec. 6015(d)(3)(A); see also sec. 1.6015-3(d)(2),

Income Tax Regs.    Under the flush language of section 6015(a),

any allocation under section 6015(d)(3) is made without regard to

community property laws.    Charlton v. Commissioner, T.C. Memo.

2001-76.    Erroneous items of income are allocated to the spouse

who was the source of the income.    Sec. 1.6015-3(d)(2)(iii),

Income Tax Regs.    An erroneous item that would otherwise be

allocated to the nonrequesting spouse is allocated to the

requesting spouse to the extent that the requesting spouse

received a tax benefit on the joint return.    Sec. 1.6015-

3(d)(2)(i), Income Tax Regs.

     Petitioner was the source of the unreported income of

$40,578; because such income is allocable to him, petitioner is

not entitled to section 6015(c) relief with respect to that

income.    See sec. 1.6015-3(d)(2)(iii), Income Tax Regs.   The

remaining unreported income of $658 was earned by Ms. Collis and

is, thus, allocable to her.    See id.   Allocation of the earned

income credit is not permitted because petitioner received a tax
                              - 10 -

benefit on the joint return from the erroneous item.    See sec.

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

     Although $658 of the unreported income is allocable to Ms.

Collis, under section 6015(c)(3)(C) apportionment of the

liability does not apply if the Commissioner “demonstrates that

an individual making an election under this subsection had actual

knowledge, at the time such individual signed the return, of any

item giving rise to a deficiency (or portion thereof) which is

not allocable to such individual”.     This Court has defined actual

knowledge as “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).     In the case of omitted income

(such as the situation involved herein), the electing spouse must

have an actual and clear awareness of the omitted income.”

Cheshire v. Commissioner, supra at 195.

     When one spouse requests relief under section 6015(c), the

burden of proving the spouse’s actual knowledge of an item is on

the Commissioner.   Sec. 6015(c)(3)(C).

     Respondent has not presented any evidence demonstrating that

petitioner had actual knowledge of the unreported income

attributable to Ms. Collis.   See sec. 6015(c)(3)(C).   Therefore,

petitioner is entitled to section 6015(c) relief with respect to

the $658 of unreported income attributable to Ms. Collis.
                                 - 11 -

C.   Section 6015(f)

      Section 6015(f) permits relief from joint and several

liability where “it is inequitable to hold the individual liable

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

Sec. 6015(f)(1).    We review de novo petitioner’s entitlement to

equitable relief under section 6015(f).     See Porter v.

Commissioner, 132 T.C. 203, 210 (2009).

      Pursuant to section 6015(f), the Commissioner has prescribed

revenue procedure guidelines to help IRS employees determine

whether a requesting spouse is entitled to relief from joint and

several liability.     See Rev. Proc. 2003-61, 2003-2 C.B. 296,

modifying and superseding Rev. Proc. 2000-15, 2000-1 C.B. 447.

The Court consults these guidelines when reviewing the IRS’

denial of relief.      See Washington v. Commissioner, 120 T.C. 137,

147-152 (2003).

      According to Rev. Proc. 2003-61, sec. 4.01, 2003-2 C.B. at

297-298, a requesting spouse must satisfy threshold conditions

which include, inter alia, that the income tax liability from

which the requesting spouse seeks relief be attributable to an

item of the nonrequesting spouse, unless one of the enumerated

exceptions applies.     The remaining portion of the liability from

which petitioner was not relieved under section 6015(c) is

attributable to petitioner.     In addition, none of the exceptions

enumerated in the revenue procedure applies to petitioner.
                             - 12 -

     Accordingly, petitioner is not entitled to relief from joint

and several liability under section 6015(f).

Conclusion

     We have considered all of the arguments made by the parties,

and, to the extent that we have not specifically addressed them,

we conclude that they are without merit.

     To reflect the foregoing,


                                           Decision will be entered

                                   under Rule 155.
