                        T.C. Memo. 2005-201



                      UNITED STATES TAX COURT



                   RUTH E. NEAL, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 8506-03.             Filed August 22, 2005.



     J. Larry Broyles, for petitioner.

     Edwina L. Jones, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION

     SWIFT, Judge:   The issue for decision is whether petitioner

is entitled to equitable relief from joint and several liability

under section 6015(f) with respect to the following unpaid

Federal income taxes that are attributable to income earned by

petitioner’s former spouse as an anesthesiologist:
                                  - 2 -
                           Year       Amount
                           1993      $52,689
                           1994       31,191
                           1995       20,039


     Unless otherwise indicated, all section references are to

the Internal Revenue Code in effect for the years in issue, and

all Rule references are to the Tax Court Rules of Practice and

Procedure.


                           FINDINGS OF FACT

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

     At the time the petition was filed, petitioner resided in

Evans, Georgia.

     In the late 1960s, petitioner graduated with a B.S. in

chemistry from Xavier University located in New Orleans,

Louisiana.   In May of 1973, petitioner graduated with a medical

degree from Howard University College of Medicine, located in

Washington, D.C.

     After graduating from medical school, petitioner completed a

1-year internship and a 3-year radiology residency also at Howard

University Hospital.

     On January 3, 1976, petitioner and Alimam Neal (Alimam) were

married.   At the time of their marriage, petitioner was 27 and

Alimam was 28 years old.    This marriage was petitioner's first

and Alimam's second.
                               - 3 -
     Alimam also obtained a medical degree and in 1977 completed

his medical residency in the Department of Anesthesiology at

Walter Reed Army Medical Center located in Washington, D.C.

     In 1977, at the end of petitioner's and of Alimam’s medical

residencies, petitioner and Alimam moved to Augusta, Georgia,

where petitioner has been employed full time as a radiologist at

the hospital affiliated with the Medical College of Georgia and,

since 1997, as a member of the faculty at the Medical College of

Georgia.   In 2002, petitioner received the Georgia State Medical

Association's medallion, its highest honor, for “exemplary

medical service and community contributions.”

     For 3 years after moving to Georgia in 1977, as part of his

commitment to the Army relating to the costs of his medical

school education, Alimam was employed at the Dwight David

Eisenhower Army Medical Center as an anesthesiologist.   In 1980,

after completing his commitment to the Army, Alimam left military

service and worked at the Medical College of Georgia for 1 year

and thereafter established his own medical practice.   From 1981

through the late 1990s, including the years at issue herein,

Alimam has maintained his own medical practice with a specialty

in anesthesiology.

     In 1979, 1981, and 1985, petitioner and Alimam’s three

children were born.
                                 - 4 -
     During the years at issue herein, petitioner’s only

significant source of income was her salary from her employment

as a radiologist and as a faculty member at the Medical College

of Georgia.   Each month, petitioner’s salary was deposited into a

separate checking account that she maintained.

     During the years at issue herein, Alimam received income

from his medical practice and from rental real estate, which real

estate he separately owned.

     As discussed below, during most of the years of their

marriage, including the years at issue herein, petitioner

herself, from her income, paid most of the family expenses.

Alimam paid only a limited portion of the family expenses, and

Alimam spent an exorbitant amount of his money on personal

investments and other, nonfamily matters.

     Using her income, petitioner paid her own personal expenses,

one-half of the mortgage on the family residence, and most of the

expenses of the three children, including the costs of the

children’s clothing and school supplies, private school tuition,1

and various extracurricular activities such as football, soccer,

gymnastics, piano, and ballet.    Using her income, petitioner also

purchased the groceries and other household supplies.   Petitioner




     1
        During the years at issue, private school tuition for the
three children totaled $1,200 a month.
                               - 5 -
spent little on herself, and essentially all of petitioner’s

income in each year was spent on family expenses.

     Other than a mandatory State retirement fund to which

petitioner contributed, petitioner does not have significant

savings.

     Using his income, Alimam generally paid the other half of

the monthly mortgage, the household utility bills, payments due

on the various cars he purchased, the payments due on

petitioner’s one car, and his many personal expenses.

     Throughout their marriage, petitioner and Alimam maintained

separate checking accounts, and generally, the monthly mortgage

payments were made with checks written by Alimam.

     In 1989, Alimam filed for bankruptcy.   Petitioner also

signed the bankruptcy petition.

     At the time of the above bankruptcy, Alimam inaccurately

told petitioner that the above bankruptcy and their poor

financial situation were caused by various tax shelter

deductions, which Alimam had claimed on their joint Federal

income tax returns and which had been audited and disallowed by

respondent, resulting in large tax deficiencies.    In fact, Alimam

and petitioner’s bankruptcy and tax problems related

significantly to unpaid taxes attributable to Alimam’s income

from his medical practice.   Around the same time, petitioner had

heard from friends and medical colleagues that they also had
                                - 6 -
claimed tax shelter deductions that had been disallowed by

respondent, and petitioner believed Alimam’s explanation as to

the reason for their financial difficulties and for the

bankruptcy petition that was filed.

       During the hearings relating to the above bankruptcy,

petitioner first learned that Alimam had purchased in his own

name, among other assets, a boat, a villa in Colorado, six or

seven cars, and expensive fine art.     Alimam had not informed

petitioner of any of these purchases.     This first bankruptcy case

was closed on June 11, 1991.    The record is unclear as to the

resolution of this bankruptcy case.

       A number of times during the years at issue, due to Alimam’s

failure to pay household utility bills, the family’s utilities

were shut off, and on one occasion, in order to keep the

utilities on, petitioner pawned a Rolex watch Alimam had given

her.

       On June 16, 1995, Alimam again filed for bankruptcy, and

again petitioner signed this bankruptcy petition.     This time,

Alimam inaccurately told petitioner that this second bankruptcy

was caused by another audit by respondent in which respondent

disallowed expenses claimed on their joint Federal income tax

returns filed in the early 1990s relating to Alimam’s medical

practice.
                                  - 7 -
     Listed below are the assets included in the 1995 bankruptcy

estate and an indication of whether the assets, at that time,

were held in the name of petitioner, in the name of Alimam, or

jointly.   The bankruptcy documents in evidence do not indicate

whether the dollar amounts indicated for the assets reflect the

estimated value or the cost of the assets.


                   Asset                   Petitioner    Alimam     Joint
  Real property - Martinez, GA                 --           --    $320,000
  Real property - Quincy, FL                   --       $ 35,000      --
  Real property - Augusta, GA                  --        183,000      --
  Real property - Hilton Head Island, SC       --         75,000      --
  Checking accounts                         $   200          800      --
  Individual retirement account                --           --       4,000
  State retirement plan                      77,000         --        --
  1993 Mercedes automobile                        0*        --        --
  1982 Mercedes automobile                     --          7,000      --
  1984 Dodge station wagon automobile          --            500      --
  1985 Ford LTD automobile                     --              0      --
  1986 Ford Thunderbird automobile             --          4,500      --
  1992 Mercedes automobile                     --              0*     --
  Household goods & clothes                    --           --       9,450
  Furs & jewelry                              2,000         --        --
                                Total       $79,200     $305,800 $333,450

                             * Leased assets.


This second bankruptcy case was closed on May 15, 1996, and the

record is unclear as to the resolution of this bankruptcy case.

     At some point prior to 1996, petitioner learned that Alimam

was having a number of extramarital affairs, including a long-

term affair with a woman whom, with her child, Alimam financially

supported.

     On July 5, 1996, as a result of Alimam’s mismanagement of

the marital finances (including his failure to pay the taxes at

issue herein), Alimam’s extramarital affairs, and other marital
                               - 8 -
problems, petitioner, with their three children, left the marital

home.   Petitioner and Alimam were divorced on April 14, 1998.

     In the divorce decree of the Superior Court of Columbia

County, State of Georgia, Alimam was ordered to pay all

outstanding joint Federal income taxes “as well [as] any other

future tax liability having been incurred during the course of

the parties’ marriage”.

     In the divorce proceeding, petitioner was not awarded

alimony or any support payments from Alimam.   Alimam was ordered

to pay monthly child support of $3,000 for the three children,

which child support Alimam paid only sporadically.   Alimam was

once incarcerated for failure to pay such child support.

     Throughout their marriage and in spite of petitioner’s

requests, Alimam did not provide to petitioner any financial

information relating to his medical practice, and petitioner was

never shown any books and records relating to Alimam’s medical

practice.

     During the years in issue, all of petitioner’s annual income

and her withheld taxes were reflected on Forms W-2, Wage and Tax

Statement, which petitioner gave to Alimam each year prior to the

preparation by Alimam’s accountant of their joint Federal income

tax returns.   The taxes withheld from petitioner’s salary each

year reflected essentially the total Federal income tax
                               - 9 -
liabilities that would have been due on petitioner’s income had

petitioner filed separate Federal income tax returns.

     During the years at issue, Alimam did not have any taxes

withheld from his income, and Alimam did not make any estimated

tax payments relating to his income.

     In connection with the preparation of petitioner and of

Alimam’s joint Federal income tax return for each of the years

1981 through 1996, Alimam would gather the information relevant

to the preparation of the tax returns, including the Forms W-2

that petitioner provided to him, and take the information to his

accountant.   The accountant would prepare the tax returns and

give them to Alimam.   Alimam would sign the tax returns and then

generally give the tax returns to petitioner to sign, after which

Alimam would take the tax returns back from petitioner and mail

to respondent the signed tax returns.

     On their 1993 and 1995 Federal income tax returns, however,

Alimam apparently signed petitioner’s signature.

     Year after year (from 1981 through 1996) and without

petitioner’s knowledge (and also apparently without his

accountant’s knowledge), in his mailing to respondent of

petitioner and Alimam’s tax returns, Alimam would not include any

payment of the tax balances shown to be due on the tax returns as

filed, which balances related to unpaid taxes attributable to

Alimam’s income from his medical practice.
                             - 10 -
     Specifically with regard to the years at issue herein, on

December 1, 1994, Alimam untimely mailed to respondent petitioner

and Alimam’s 1993 joint Federal income tax return on which return

petitioner and Alimam’s total joint Federal income tax liability

was reflected as $72,991 and on which return the only taxes shown

as paid were the $20,302 that petitioner had paid through income

tax withholding.

     On September 15, 1995, Alimam untimely mailed to respondent

petitioner and Alimam’s 1994 joint Federal income tax return on

which return petitioner and Alimam’s total joint Federal income

tax liability was reflected as $52,902 and on which return the

only taxes shown as paid were the $21,711 that petitioner had

paid through income tax withholding.

     On June 4, 1996, Alimam timely mailed to respondent

petitioner and Alimam’s 1995 joint Federal income tax return on

which return petitioner and Alimam’s total joint Federal income

tax liability was reflected as $43,260 and on which return the

only taxes shown as paid were the $23,221 that petitioner had

paid through income tax withholding.

     Petitioner did not meet Alimam’s accountant until sometime

in 1996 soon after which petitioner and Alimam separated.

     Petitioner and Alimam’s joint Federal income tax returns for

1993, 1994, and 1995 were accurately prepared by Alimam’s
                             - 11 -
accountant, and respondent does not assert any tax deficiencies

in the taxes reported thereon.

     Petitioner understood and assumed that Alimam, when he

mailed the above tax returns to respondent for 1993, 1994, and

1995, was including a payment for the full tax balances shown to

be due.

     As indicated above, however, Alimam did not include any

payments in his mailing to respondent of the 1993, 1994, and 1995

joint Federal income tax returns.

     Twice, petitioner’s wages or bank account were levied in

partial collection of the above unpaid joint Federal income

taxes.

     Only in 1996, after separating from Alimam and after

speaking to Alimam’s accountant and lawyer for the first time,

did petitioner learn that Alimam had filed the above Federal

income tax returns without including payments of the tax balances

shown to be due thereon.

     On February 8, 2000, petitioner made a timely election under

section 6015(f) for equitable relief from joint and several

liability relating to the above 1993, 1994, and 1995 unpaid taxes

attributable to Alimam’s income.    On April 22, 2003, respondent

issued a notice of determination denying petitioner’s request for

equitable relief.
                                    - 12 -
       When notified of the instant Court proceeding, Alimam did

not intervene, and Alimam does not challenge petitioner’s

eligibility for equitable relief from joint and several

liability.    Alimam was not called as a witness at trial.         As of

the time of trial, petitioner no longer has contact with Alimam,

and Alimam apparently is no longer licensed to practice medicine.

       Reflected in the table below, for the years at issue, are

comparisons of petitioner’s and of Alimam’s separate earned

income, estimates of petitioner’s and of Alimam’s “separate”

Federal income tax liabilities, and the Federal income tax

payments that were made for each year (reflecting primarily

petitioner’s withheld taxes), as well as the total amount of

petitioner and of Alimam’s joint Federal income tax liability

reported on the tax returns and not challenged by respondent.

Amounts estimated for the “separate” (sep.) tax liabilities of

petitioner and of Alimam are based on respondent’s computations

of the portions of petitioner and of Alimam’s total joint Federal

income taxes for 1993, 1994, and 1995 that are attributable

separately to petitioner and to Alimam.


                Petitioner                    Alimam                Joint
        Earned Est. sep.    Tax       Earned Est. sep.   Tax      total tax
Year    income tax liab. payments     income tax liab. payments   liability
1993   $110,163 $21,987 $20,302      $154,316 $51,004      0       $72,991
1994    116,759   23,459   21,711     106,180  29,443      0        52,902
1995    122,693   25,194   23,221      78,310  18,066      0        43,260
                               - 13 -
     Petitioner did not significantly benefit from Alimam’s

failure to pay the tax balances shown to be due on their joint

Federal income tax returns.

     For 1996 and subsequent years, petitioner has continued to

have income taxes withheld from her salary, has timely filed her

separate individual Federal income tax returns, and has paid in

full her Federal income tax liabilities.

     Petitioner continues to support her three children

financially, two of whom are adults and not currently attending

school.   On account of the bankruptcies, unpaid tax liabilities,

resulting poor credit, and other financial problems arising from

her marriage to Alimam, petitioner currently resides in a home

and drives a car owned by friends.      Since her divorce from

Alimam, petitioner has not taken vacations, either with the

children or separately.


                               OPINION

     Generally, taxpayers filing joint Federal income tax returns

are jointly and severally liable for all taxes due thereon.      Sec.

6013(d)(3).

     Taxpayers, however, may be relieved of joint and several

liability under limited circumstances described in section

6015(b), (c), and (f).    Petitioner alleges that, on the

particular facts and circumstances of this case, respondent
                              - 14 -
abused his discretion under section 6015(f) in denying equitable

relief to petitioner from joint and several liability.2

     Respondent raises an issue as to the admissibility into

evidence herein of facts not presented to respondent’s Appeals

office during the administrative hearing, asserts that he did not

abuse his discretion in denying petitioner relief from joint and

several liability, and, for the first time in his opening post-

trial brief, raises a jurisdictional question as to whether we

may review in this underpayment case respondent’s denial of

section 6015(f) relief.3   In Ewing v. Commissioner, 122 T.C. 32,

44 (2004), we held that we are not limited to a consideration of

the facts presented to respondent’s Appeals office, and in Ewing



     2
         Sec. 6015(f) provides:

          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.
     3
        In respondent’s pretrial memorandum, in respondent’s
opening statement at trial, throughout the trial, and in
respondent’s reply brief, respondent makes no mention of the
jurisdictional question. Only in respondent’s opening posttrial
brief does respondent raise this jurisdictional question and only
by way of an obscure sentence in the middle of arguments relating
to other issues. Respondent does not identify this
jurisdictional question as a discrete issue in this case, and
respondent provides no argument on this jurisdictional question.
                                - 15 -
v. Commissioner, 118 T.C. 494, 506-507 (2002), we held that we

have jurisdiction to review claims for section 6015(f) relief

similar to petitioner’s claim.

     Under section 6015(f), whether it would be inequitable for a

requesting spouse to be held jointly liable for unpaid taxes

“requires a careful consideration of all possible factors that

are relevant” to the inquiry.    Alt v. Commissioner, 101 Fed.

Appx. 34, 39-40 (6th Cir. 2004) (quoting Silverman v.

Commissioner, 116 F.3d 172, 175 (6th Cir. 1997), revg. T.C. Memo.

1996-69), affg. 119 T.C. 306 (2002).

     Rev. Proc. 2000-15, sec. 4.03, 2000-1 C.B. 447, 448-449,

sets forth guidelines or factors to consider in deciding claims

for equitable relief under section 6015(f) as follows:


          (1) Whether the requesting spouse will suffer economic
     hardship;

          (2) Whether the requesting spouse, at the time the
     return was signed, had knowledge or reason to know that the
     liability reported on the return would not be paid;

          (3) Whether the nonrequesting spouse has a legal
     obligation to pay the unpaid joint Federal income taxes;

          (4) Whether the underpayments of joint Federal income
     taxes are attributable to the nonrequesting spouse;

          (5) Whether the spouses are separated or divorced;

          (6) Whether the requesting spouse suffered abuse by the
     nonrequesting spouse;

          (7) Whether the requesting spouse received significant
     benefit, beyond normal support, as a result of the
     underpayments of joint Federal income taxes; and
                                - 16 -
          (8) Whether the requesting spouse made a good faith
     effort to comply with the Federal income tax laws in years
     following the years to which the request for relief relates.


     Generally, no single factor will control whether equitable

relief will be granted in a particular case.   Rather, all

relevant facts will be considered and weighed appropriately, and

the above guidelines are not intended to be exhaustive.      Ewing v.

Commissioner, 122 T.C. at 48; Rev. Proc. 2000-15, sec. 4.03(2).

     For example, other factors that have been considered by this

Court include whether an understatement or underpayment of tax

was the result of concealment, overreaching, or other wrongdoing

on the part of the nonrequesting spouse.   See, e.g., Ewing v.

Commissioner, 122 T.C. at 48-49.

     In Lopez v. Commissioner, T.C. Memo. 2005-36, relief was not

granted because, although various facts weighed in favor of the

taxpayer, the taxpayer’s knowledge and financial resources

weighed heavily against granting relief.   In Keitz v.

Commissioner, T.C. Memo. 2004-74, relief was granted because the

taxpayer’s lack of knowledge of the underpayment outweighed the

absence of economic hardship.

     As listed below, in this case, it has been established that

most of the guidelines or factors listed in Rev. Proc. 2000-15,

supra, weigh in favor of granting petitioner relief from joint

tax liability for 1993, 1994, and 1995 with regard to the unpaid

taxes attributable to Alimam’s income from his medical practice:
                             - 17 -
(1) Under the divorce decree, Alimam has a legal obligation to

pay the unpaid taxes due for the years petitioner and Alimam were

married, including 1993, 1994, and 1995; (2) essentially all of

the underpayments at issue herein are attributable to Alimam;

(3) petitioner and Alimam are currently divorced; (4) petitioner

did not receive a significant benefit from the unpaid taxes; and

(5) petitioner has, throughout her marriage with Alimam and for

subsequent years, made a good faith effort to comply with the tax

laws with regard to her income.

     The two remaining factors (whether petitioner had knowledge

of or reason to know of Alimam’s nonpayment of the taxes due and

whether petitioner would suffer economic hardship if not granted

relief from joint and several liability) are more difficult

questions.


Petitioner’s Knowledge of or Reason To Know
of the Nonpayment of the Tax

     In determining whether petitioner, at the time the tax

returns were signed, had knowledge or reason to know that the tax

reported on the returns would not be paid, relevant factors

include petitioner’s level of education, petitioner’s involvement

in the family’s financial affairs, petitioner’s lifestyle,

standard of living, and spending patterns, and Alimam’s

evasiveness and deceit concerning the marital finances.   See Levy

v. Commissioner, T.C. Memo. 2005-92 (citing Kistner v.
                             - 18 -
Commissioner, 18 F.3d 1521, 1525 (11th Cir. 1994), revg. and

remanding T.C. Memo. 1991-463; Stevens v. Commissioner, 872 F.2d

1499, 1505 (11th Cir. 1989), affg. T.C. Memo. 1988-63).

     Respondent argues that petitioner should be regarded as

having had constructive knowledge of the nonpayment by Alimam of

the taxes reflected on petitioner and Alimam’s 1993, 1994, and

1995 joint Federal income tax returns.

     Respondent argues that the unpaid taxes contributing to the

bankruptcy filings and the garnishment of petitioner’s wages

should have put petitioner on notice that Alimam would not pay

the taxes for 1993, 1994, and 1995.   To the contrary, Alimam

misrepresented to petitioner that the unpaid taxes for years

before 1993 related to tax deficiencies that had been determined

by respondent, which explanation petitioner believed, and which

belief we find reasonable and credible.

     Respondent argues that petitioner should be treated as

having had constructive knowledge that the taxes reflected on the

tax returns for 1993, 1994, and 1995 would remain unpaid because

she had a duty of inquiry.

     On the particular facts of this case, however, where, among

other things, filed tax returns accurately reflected the correct

tax liabilities, nonpayment of the balances of the taxes shown to

be due on the returns was concealed by Alimam, and petitioner was

not otherwise put on notice of the nonpayment, we will not treat
                              - 19 -
petitioner as having had constructive knowledge of the unpaid

taxes relating to Alimam’s income.


Economic Hardship

     Generally, economic hardship for purposes of section 6015(f)

is defined as the inability to meet “basic living expenses.”     Alt

v. Commissioner, 101 Fed. Appx. 34, 44 (6th Cir. 2004), affg. 119

T.C. Memo. 306 (2002) (citing sec. 301.6343-1(b)(4), Proced. &

Admin. Regs).4

     Petitioner argues that in spite of the salary she receives

as a medical doctor, she would suffer economic hardship if not

granted equitable relief herein.   Petitioner notes that she

supports her youngest child and her two older children, that each

month she just breaks even with her finances, and that she has a

poor credit rating.

     Although for many years petitioner has experienced financial

problems as the result of Alimam’s conduct and although

petitioner does not have any significant equity in any assets,

the facts before us are inconclusive as to the degree to which

petitioner would suffer economic hardship if she were denied



     4
         Sec. 301.6343-1(b)(4), Proced. & Admin. Regs., provides--

          Economic hardship--(i) General rule. The levy is
     creating an economic hardship due to the financial condition
     of an individual taxpayer. This condition applies if
     satisfaction of the levy in whole or in part will cause an
     individual taxpayer to be unable to pay his or her
     reasonable basic living expenses.
                              - 20 -
relief from joint liability herein.    We note particularly that no

financial records as to petitioner’s net worth were placed in

evidence.


Conclusion

     Taking into account all of the facts and circumstances

before us in this case and balancing the above relevant

guidelines and factors, we conclude that it would be inequitable

to hold petitioner liable for the balances due relating to

petitioner and Alimam’s 1993, 1994, and 1995 joint Federal income

tax liabilities and that are attributable to Alimam.

     We note particularly the following:   Alimam’s legal

obligation relating to the unpaid taxes, the fact that the taxes

in issue are attributable to Alimam’s income, Alimam’s deception

with regard to his investments and nonpayment of the taxes due,

the absence of any significant benefit to petitioner from

Alimam’s failure to pay the taxes, Alimam’s exclusion of

petitioner from the tax return preparation process and from his

financial affairs, petitioner’s payment of the majority of the

family’s expenses and her continued support of the children, and

petitioner’s payment every year of the Federal income taxes

attributable to her income.

     On the facts of this case, under section 6015(f), petitioner

is entitled to equitable relief from joint and several liability

with respect to the unpaid taxes at issue herein.
                             - 21 -
     To reflect the foregoing,



                                      Decision will be entered

                                 under Rule 155.5




     5
        The Rule 155 computation in this case is to take into
account the nominal unpaid taxes for 1993, 1994, and 1995 that
appear to be attributable to petitioner’s income.
