                          T.C. Summary Opinion 2014-98



                         UNITED STATES TAX COURT



        JOHN PEJOSKI, Petitioner, AND STACY PEJOSKI, Intervenor v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket No. 25428-11S.                          Filed September 23, 2014.



      John Pejoski, pro se.

      Gloria M. Juncadella, for respondent.



                              SUMMARY OPINION


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

section 7463 of the Internal Revenue Code in effect when the petition was filed.

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.
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Unless otherwise indicated, all section references are to the Internal Revenue Code

in effect at all relevant times.

        This is an appeal from the final Appeals determination issued to petitioner

on September 28, 2011, in which the Office of Appeals of the Internal Revenue

Service allowed him partial relief from joint and several liability pursuant to

section 6015(b) with respect to his joint return for taxable year 2008. The issue

for decision is whether petitioner is entitled to partial relief from joint and several

liability under section 6015(b) for taxable year 2008.

                                     Background

        Some of the facts in this case were stipulated by the parties and are so

found. Specifically, petitioner and respondent executed a stipulation of facts that

was taken into evidence, except for paragraphs 11, 12, 13, and 17. Intervenor

orally stipulated paragraphs 1 through and including 10, 14, 15, 16, and 18,

through and including 21 of the stipulation of facts.

        Petitioner and intervenor were married and living together at the time they

filed a joint return of their Federal income tax for taxable year 2008. They

separated on or about September 29, 2010, and they were divorced on June 28,

2011.
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      Shortly before they separated, on September 20, 2010, respondent issued a

notice of deficiency to petitioner and intervenor in which respondent determined a

deficiency of $3,038 in the income tax reported on their joint return for 2008. The

tax deficiency was based upon unreported cancellation of indebtedness income

from two sources: an unpaid balance of $888 from a credit card issued by Chase

Bank USA, and an unpaid debt of $9,056 from a home equity loan that had been

extended by GMAC Mortgage, LLC.

      Neither petitioner nor intervenor filed a petition for redetermination of the

deficiency in this Court. Accordingly, on or about February 7, 2011, respondent

assessed the deficiency.

      Shortly thereafter, on March 4, 2011, petitioner filed a Form 8857, Request

for Innocent Spouse Relief. In that request, petitioner alleged that intervenor had

obtained a home equity loan by forging his signature and that the loan was later

canceled after intervenor failed to pay it. He also alleged that the matter was then

under investigation by the Ocean County Prosecutor’s Office along with several

other forgeries committed by intervenor.

      On December 8, 2011, intervenor was indicted for third-degree theft by

deception by the Ocean County Prosecutor’s Office in Ocean County, New Jersey.

The indictment states that intervenor
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      purposely did obtain the property of Homecomings Financial
      Network, Inc., a GMAC company, and/or John Pejoski [petitioner],
      having an approximate value in excess of $500.00, by deception, that
      is by creating or reinforcing the false impression as to the execution
      of the mortgage documents letters and checks that is by signing
      and/or issuing the same in the name of John Pejoski without his
      knowledge, contrary to the provisions of N.J.S.A. 2C:20-4.

The Ocean County Prosecutor’s Office also indicted intervenor on two counts of

obtaining controlled dangerous substances by fraud in violation of N.J. Stat. Ann.

sec. 2C:35-13 (West 2005).

      It appears that the criminal prosecution of intervenor on the charge of third-

degree theft by deception was postponed after intervenor’s application for

admission to the statewide Pretrial Intervention Program (PTI) was accepted. See

generally, id. sec. 2C:43-12 (West 2005 & Supp. 2014). The PTI is a program

under which certain individuals who have not previously been convicted of any

criminal offense may seek to avoid ordinary prosecution by receiving early

rehabilitative services or supervision. Id.

      Intervenor entered the PTI with respect to the theft by deception charges and

other charges. She was assigned to the program for 24 months beginning on April

22, 2013. The prosecution of intervenor’s offenses was postponed, and she was

placed under the supervision of a probation officer. See generally id. sec. 2C:43-

12 and 13.
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                                     Discussion

      Section 6015(b)(1) authorizes the Secretary to grant relief from joint and

several liability with respect to an understatement of tax on a joint return,

otherwise imposed by section 6013(d), if the taxpayer satisfies each of the

following requirements:

             (A) a joint return has been made for a taxable year;

             (B) on such return there is an understatement of tax attributable
      to erroneous items of 1 individual filing the joint return;

             (C) the other individual filing the joint return establishes that in
      signing the return he or she did not know, and had no reason to know,
      that there was such understatement;

             (D) taking into account all the facts and circumstances, it is
      inequitable to hold the other individual liable for the deficiency in tax
      for such taxable year attributable to such understatement; and

             (E) the other individual elects (in such form as the Secretary
      may prescribe) the benefits of this subsection not later than the date
      which is 2 years after the date the Secretary has begun collection
      activities with respect to the individual making the election * * *

      Respondent concedes that, as to petitioner, each of the above requirements

is satisfied with respect to the understatement, as defined by section

6662(d)(2)(A), attributable to the cancellation of indebtedness income from (1) the

credit card debt of $888 that was forgiven by Chase Bank USA during 2008, and

(2) the mortgage indebtedness of $9,056 that was forgiven by GMAC Mortgage,
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LLC, during that year. Accordingly, respondent concedes that petitioner is

entitled to relief under section 6015(b) from liability with respect to the

understatement on the joint return that he filed with intervenor for 2008.

      Intervenor disagrees. She testified that petitioner executed the mortgage

agreement and shared the proceeds of the loan. She also testified that petitioner

knew of, and benefited from, the credit card indebtedness, contrary to his

testimony. We do not credit intervenor’s testimony. We found her testimony to

be vague, self-serving, and not supported by the record.

      On the other hand, we found petitioner’s testimony to be credible.

Petitioner testified that he did not sign the mortgage documents or authorize

anyone to sign those documents on his behalf. He testified that he did not know of

the existence of the mortgage loan or the cancellation of the indebtedness from

that loan until late 2010, after the time his joint return for 2008 was filed. He

testified that he did not share in the proceeds of that loan or benefit from the loan.

Petitioner also testified that he was unaware of the credit card from Chase Bank

until after the investigation of the mortgage loan and that he did not have access to

that credit card or benefit from it. Finally, petitioner testified that he did not learn

that indebtedness from the Chase credit card had been canceled until after his joint

return for 2008 was filed.
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      On the basis of the record in this case, we agree with respondent that

petitioner has established that he has met each of the requirements of section

6015(b)(1) with respect to the understatement of tax for petitioner’s joint return

for taxable year 2008. Accordingly, we agree with respondent that petitioner is

entitled to partial relief from joint and several liability pursuant to section 6015(b)

with respect to his joint return for taxable year 2008.

      To reflect the foregoing,


                                                An appropriate decision will

                                        be entered.
