                         T.C. Memo. 2011-16



                       UNITED STATES TAX COURT



         VALARIE NADINE HAFNER STEPHENSON, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 9072-09.                 Filed January 20, 2011.



     Valarie Stephenson, pro se.

     Anna A. Long, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     VASQUEZ, Judge:    Pursuant to section 6015(e)(1),1 petitioner

seeks review of respondent’s determination that she is not

entitled to relief from joint and several liability under section



     1
        Unless otherwise indicated, all section references are to
the Internal Revenue Code, as amended, and Rule references are to
the Tax Court Rules of Practice and Procedure.
                               - 2 -

6015(f) with respect to her Federal income tax liability for

1999.2

                         FINDINGS OF FACT

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

The stipulations of facts and accompanying exhibits are

incorporated herein by this reference.   Petitioner resided in

California at the time she filed her petition.

I.   Petitioner’s Relationship With Sean Stephenson

      Petitioner met Sean Stephenson (Mr. Stephenson) in 1990 when

she was a freshman and he was a junior at the same high school in

Phoenix.   He proposed the following school year.   They were

married on May 12, 1991, shortly after Mr. Stephenson graduated

from high school and enlisted in the U.S. Marine Corps (Marine

Corps).

      After the wedding Mr. Stephenson was stationed in Sacramento

and petitioner remained in Phoenix to begin her junior year of

high school.   Three months into her junior year petitioner

dropped out and moved to Sacramento to live with Mr. Stephenson.

She never graduated from high school and has failed the General

Education Development (GED) test three times.3




      2
        On brief petitioner abandoned her argument that
respondent erred in denying her relief under sec. 6015(b) and
(c).
      3
        Petitioner also suffered from learning disabilities that
forced her to be held back in elementary school.
                               - 3 -

     During their time in Sacramento Mr. Stephenson began

verbally abusing petitioner, often making fun of her lack of

education and learning disabilities in front of Mr. Stephenson’s

family and their friends.   In 1994 Mr. Stephenson completed his

service in the Marine Corps, and they moved back to Phoenix.    The

verbal abuse turned into physical abuse, and Mr. Stephenson began

throwing items at petitioner when he became angry.

     In 1997 or 1998 Mr. Stephenson moved to Henderson, Nevada,

for a business opportunity.4   Petitioner remained in Phoenix for

6 months until Mr. Stephenson found suitable housing.   They lived

in Henderson for approximately 9 months before moving back to

Phoenix.5

     Petitioner and Mr. Stephenson lived in Dallas from 1999

until 2002.   Mr. Stephenson worked as a stockbroker and day-

trader, and petitioner worked at a doctor’s office.   Mr.

Stephenson was highly successful, and he purchased a number of

cars including a BMW that petitioner drove to work.   They lived

in three different condominiums during their time in Dallas.




     4
        At some point between 1994 and his departure for
Henderson Mr. Stephenson became a licensed stockbroker.
     5
        Petitioner worked as a receptionist at a doctor’s office
in Henderson.
                                 - 4 -

II.   Mr. Stephenson’s Financial Control and the 1999 Federal
      Income Tax Liability

      At all relevant times Mr. Stephenson managed the couple’s

finances.6    He did not allow petitioner access to the mail box or

to a filing cabinet that contained the checkbook and financial

documents, both of which required a key that only Mr. Stephenson

possessed.7    When Mr. Stephenson needed petitioner to sign

something, he placed it in front of her and told her where to

sign.     If petitioner asked what she was signing, Mr. Stephenson

made threats of violence or told her she was not intelligent

enough to understand.

      Petitioner and Mr. Stephenson jointly filed Form 1040, U.S.

Individual Income Tax Return, for 1999 (the return) showing

$214,711 of taxable income and tax owed of $77,865.8    No payment

was included with the return, and the return showed only a $915

withholding credit.9


      6
        Petitioner and Mr. Stephenson shared at least one joint
checking account, and petitioner used a debit card to make
household purchases. Most other purchases required Mr.
Stephenson’s permission.
      7
        In order to have access to her important personal
documents, petitioner hid from Mr. Stephenson her birth
certificate, passport, and marriage certificate in a Bible.
      8
        The Internal Revenue Service (IRS) received the return on
Oct. 18, 2000, and assessed the tax on Nov. 20, 2000.
      9
        Mr. Stephenson made a $20,000 payment to the U.S.
Treasury on Apr. 10, 1999. It is unclear whether this payment
was intended to be the first of four quarterly estimated tax
                                                   (continued...)
                                      - 5 -

       Beginning in August 2004 and continuing throughout 2006

petitioner and Mr. Stephenson made regular payments to the

Internal Revenue Service (IRS), attempting to pay off the 1999

tax liability.          At the direction of Mr. Stephenson petitioner

wrote at least five of the checks.10

III.       San Diego:    2002-2006

       In 2002 petitioner and Mr. Stephenson moved to San Diego.

During their time in San Diego they lived in highrise

condominiums, and petitioner worked as a personal trainer.11

Many of the condominiums had gyms and/or swimming pools that

petitioner took advantage of.

       Petitioner attempted to leave Mr. Stephenson in 2003.        When

she informed him of her decision he pushed her against a wall,

grabbed his gun, pointed it at her head, and told her that he

would kill her or himself if she left him.          Petitioner became so

frightened that she decided to remain in the relationship.

       In 2005 petitioner met Mike Thomas (Mr. Thomas), a fire

engineer with the City of San Diego Fire Department.          Petitioner

routinely walked her dog around the fire station, and one day she


       9
      (...continued)
payments, but it was the only one made during 1999. The IRS
reduced the tax liability by $20,000 as a result of the payment.
       10
        The checks were made out to the “United States
Treasury”, “I.R.S.”, or “Internal Revenue Service”.
       11
        The couple reported adjusted gross income of $110,711 on
their 2004 Form 1040.
                                 - 6 -

and Mr. Thomas began talking.     Mr. Thomas immediately noticed

bruises on petitioner’s body.     At some point within the first

year of their friendship petitioner confided in Mr. Thomas that

the bruises came from Mr. Stephenson and that she was in an

abusive relationship.

IV.   Petitioner Files for Divorce

      On February 23, 2007, petitioner left Mr. Stephenson while

he was in Flagstaff, Arizona.     Mr. Thomas drove petitioner and

whatever belongings she could grab to her mother’s house in

Phoenix.     He also lent petitioner money since she had none.

      When petitioner arrived in Phoenix, she contacted a divorce

attorney but was told that she needed to reside in Arizona for 3

months before she could file for divorce.     During the 3-month

waiting period Mr. Stephenson appeared at petitioner’s mother’s

house and an altercation ensued resulting in petitioner’s

obtaining an order of protection against Mr. Stephenson.12       In

June 2007, with financial assistance from Mr. Thomas, petitioner

hired an attorney to begin the divorce proceedings.    The decree

of dissolution of marriage (divorce decree) was finalized on June

5, 2008.13


      12
           Mr. Stephenson had the order of protection quashed.
      13
        The divorce decree ordered Mr. Stephenson to: (1) Pay
petitioner spousal maintenance of $500 per month for 8.5 years;
and (2) pay the IRS any outstanding tax liability incurred by
joint filing regardless of whether petitioner is granted innocent
                                                   (continued...)
                               - 7 -

V.   Petitioner’s Federal Income Tax Compliance and Request for
     Innocent Spouse Relief

      Petitioner lived in Phoenix from February 23 until December

7, 2007.   In an attempt to take financial control of her life she

timely filed her own Federal income tax return for 2006.   She did

not, however, include any payment with her return, believing that

the IRS would send her a bill when the due date approached.

Although the IRS eventually sent petitioner a bill, which she

paid immediately, the due date had already passed and her payment

was untimely.

      In April 2007 petitioner called the IRS to ensure that her

payment had been received.   During the phone call petitioner

became aware for the first time of the unpaid 1999 joint tax

liability and her and Mr. Stephenson’s failure to file a 2005

Federal income tax return.   The IRS told petitioner about the

possibility of innocent spouse relief for the 1999 tax liability

and her opportunity to file a separate 2005 tax return since no

previous joint return had been filed for that tax year.

Petitioner filed her own 2005 tax return and requested

information on innocent spouse relief.   She has since timely

filed her 2007, 2008, and 2009 Federal income tax returns and

received refunds for 2008 and 2009.




      13
      (...continued)
spouse relief.
                                 - 8 -

      On January 11, 2008, petitioner filed Form 8857, Request for

Innocent Spouse Relief, requesting relief from joint and several

liability for the 1999 and 2004 tax years.14    Respondent

preliminarily denied petitioner’s request for relief for 1999

because it was untimely.15    Petitioner appealed, and respondent’s

Appeals Office also denied petitioner’s request because it was

untimely.

      After petitioner filed a petition with the Court challenging

respondent’s determination, Peggy Ryan (Ms. Ryan), a tax examiner

with the IRS, considered petitioner’s claim for relief on the

merits and determined that petitioner is not entitled to relief

under section 6015(f).

VI.   Current Situation

      Petitioner lives in a bedroom in Mr. Thomas’ basement in San

Diego.16    She is unemployed and unable to pay the rent.17




      14
        Respondent granted petitioner’s request for innocent
spouse relief for 2004.
      15
        The preliminary determination stated: “IRC section 6015
requires innocent spouse claims to be filed no later than two
years after the date we start collection activity against you”.
      16
        Petitioner moved back to San Diego after she decided
that it would be safer for her to live in Mr. Thomas’ house and
easier to find work in a city she was familiar with.
      17
        Mr. Thomas expected petitioner to pay rent of $700 per
month but as she struggled to find and keep work he lowered the
rent to $400 per month.
                                 - 9 -

     Since returning to San Diego petitioner has held four jobs

and quit three of them.18    She is not eligible to receive

unemployment benefits because she quit her most recent job, and

she has not received the $500 per month of spousal maintenance

that she is entitled to since August 2008.

     In June 2009 Mr. Thomas helped petitioner buy a car by

cosigning the sale contract.     Because petitioner cannot afford

the $536 monthly car payment, Mr. Thomas lends her the money each

month.

     Mr. Thomas estimates that petitioner owes him over

$10,000.19    They decided that she would begin to repay the debt

once she finds employment and is able to afford making the

payments.20   Petitioner also owes her divorce attorney $800.

                                 OPINION

     In general, a spouse who files a joint Federal income tax

return is jointly and severally liable for the entire tax

liability.    Sec. 6013(d)(3).   However, a spouse may be relieved

from joint and several liability under section 6015(f) if:      (1)

Taking into account all the facts and circumstances, it would be

inequitable to hold her liable for any unpaid tax; and (2) relief


     18
          Petitioner’s most recent job paid her $10 per hour.
     19
        Petitioner keeps track of the amount she owes Mr. Thomas
but did not have the current figures with her at trial.
     20
        In the meantime petitioner has sold her jewelry in an
attempt to pay down her debt to Mr. Thomas.
                                - 10 -

is not available to the spouse under section 6015(b) or (c).      The

Commissioner has published revenue procedures listing the factors

the Commissioner normally considers in determining whether

section 6015(f) relief should be granted.     See Rev. Proc. 2003-

61, 2003-2 C.B. 296, superseding Rev. Proc. 2000-15, 2000-1 C.B.

447.

       In determining whether petitioner is entitled to section

6015(f) relief we apply a de novo standard of review as well as a

de novo scope of review.     See Porter v. Commissioner, 132 T.C.

203 (2009); Porter v. Commissioner, 130 T.C. 115 (2008).

Petitioner bears the burden of proving that she is entitled to

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

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

A.     Threshold Conditions for Granting Relief

        In order for the Commissioner to determine that a taxpayer

is eligible for section 6015(f) relief, the requesting spouse

must satisfy the following threshold conditions:    (1) She filed a

joint return for the taxable year for which she seeks relief; (2)

relief is not available to her under section 6015(b) or (c); (3)

no assets were transferred between the spouses as part of a

fraudulent scheme by the spouses; (4) the nonrequesting spouse

did not transfer disqualified assets to her; (5) she did not file

or fail to file the returns with fraudulent intent; and (6) with
                                 - 11 -

enumerated exceptions,21 the income tax liability from which she

seeks relief is attributable to an item of the nonrequesting

spouse.22    Rev. Proc. 2003-61, sec. 4.01, 2003-2 C.B. at 297-298.


     21
            The relevant exception for our purposes states:

             If the requesting spouse establishes that * * * she was
             the victim of abuse prior to the time the return was
             signed, and that, as a result of the prior abuse, the
             requesting spouse did not challenge the treatment of
             any items on the return for fear of the nonrequesting
             spouse’s retaliation, the Service will consider
             granting equitable relief although the * * *
             underpayment may be attributable in part or in full
             to an item of the requesting spouse.

Rev. Proc. 2003-61, sec. 4.01(7)(d), 2003-2 C.B. 296, 298.
     22
        Rev. Proc. 2003-61, sec. 4.01, 2003-2 C.B. at 297-298,
also lists a seventh threshold condition: “The requesting spouse
applies for relief no later than two years after the date of the
Service’s first collection activity * * * with respect to the
requesting spouse.” We held in Lantz v. Commissioner, 132 T.C.
131 (2009), revd. 607 F.3d 479 (7th Cir. 2010), that the 2-year
limitation imposed by sec. 1.6015-5(b)(1), Income Tax Regs., and
restated in Rev. Proc. 2003-61, sec. 4.01, is an invalid
interpretation of sec. 6015(f). In Hall v. Commissioner, 135
T.C. ___ (2010), we decided to adhere to our holding in Lantz in
cases appealable in jurisdictions other than the Seventh Circuit.
In the present case, which is appealable to the Court of Appeals
for the Ninth Circuit, we continue to hold that the 2-year
limitation imposed by sec. 1.6015-5(b)(1), Income Tax Regs., is
an invalid interpretation of sec. 6015(f) and therefore need not
decide whether petitioner brought her claim for relief within 2
years of the first collection activity. See Hall v.
Commissioner, supra; Lantz v. Commissioner, supra; Golsen v.
Commissioner, 54 T.C. 742 (1970), affd. 445 F.2d 985 (10th Cir.
1971).

     We note that it would have been impossible for petitioner to
have been made aware of any collection activity relating to the
1999 unpaid tax liability before her April 2007 phone call to the
IRS. Mr. Stephenson prevented petitioner from accessing the mail
and threatened her when she asked questions about their finances.
                                                   (continued...)
                                - 12 -

     Respondent concedes that conditions (1), (2), (3), (4), and

(5) are met.   As to condition (6), we presume on the basis of

petitioner’s testimony that a small portion of the tax liability

is attributable to income she earned.23    We find, however, that

the abuse exception in Rev. Proc. 2003-61, sec. 4.01(7)(d),

applies.   See supra note 21.   Mr. Stephenson abused petitioner

throughout their marriage, and she did not question or disobey

him for fear of abuse.   If we find that petitioner is entitled to

relief on the basis of these circumstances, it would be

inequitable to hold her liable for the amount of the tax

liability attributable to the income she earned.

      Accordingly, we find that petitioner has met the threshold

criteria for relief as to the entire tax liability.

B.   Circumstances Under Which Relief Is Ordinarily Granted

      When the threshold conditions have been met, the

Commissioner will ordinarily grant relief from an underpayment of

tax if the requesting spouse meets the requirements set forth

under Rev. Proc. 2003-61, sec. 4.02, 2003-2 C.B. at 298.     To

qualify for relief under Rev. Proc. 2003-61, sec. 4.02, the

following elements must be satisfied:     (1) On the date of the


      22
      (...continued)
It was only after petitioner left Mr. Stephenson and called the
IRS that she became aware of the unpaid tax liability.
      23
        Respondent concedes that a great majority of the tax
liability is attributable to income earned by Mr. Stephenson and
that condition (6) is met as to that amount.
                               - 13 -

request for relief the requesting spouse is no longer married to,

or is legally separated from, the nonrequesting spouse, or has

not been a member of the same household as the nonrequesting

spouse at any time during the 12-month period ending on the date

of the request for relief; (2) on the date the requesting spouse

signed the return she had no knowledge or reason to know that

the nonrequesting spouse would not pay the income tax liability;

and (3) the requesting spouse will suffer economic hardship if

relief is not granted.

      When petitioner filed her request for relief on January 11,

2008, she was still married to Mr. Stephenson; and they were not

legally separated although she had moved out in February 2007.

Additionally, since petitioner and Mr. Stephenson were members of

the same household until February 2007, they were members of the

same household during the 12-month period preceding the date she

filed for relief.    Thus, petitioner is not entitled to relief

under the criteria set forth in Rev. Proc. 2003-61, sec. 4.02.

C.   Factors Used To Determine Whether Relief Will Be Granted

      Where a requesting spouse meets the threshold conditions but

fails to qualify for relief under Rev. Proc. 2003-61, sec. 4.02,

a determination to grant relief may nevertheless be made under

the criteria set forth in Rev. Proc. 2003-61, sec. 4.03, 2003-2

C.B. at 298-299.    Rev. Proc. 2003-61, sec. 4.03, provides a

nonexclusive list of factors the Commissioner will consider in
                              - 14 -

making that determination:   (1) Whether the requesting spouse is

separated or divorced from the nonrequesting spouse (marital

status factor); (2) whether the requesting spouse would suffer

economic hardship if not granted relief (economic hardship

factor); (3) whether, at the time she signed the joint return,

the requesting spouse knew or had reason to know that the

nonrequesting spouse would not pay the income tax liability

(knowledge factor); (4) whether the nonrequesting spouse has a

legal obligation to pay the outstanding tax liability pursuant to

a divorce decree or agreement (legal obligation factor); (5)

whether the requesting spouse received a significant benefit from

the unpaid income tax liability (significant benefit factor); and

(6) whether the requesting spouse has made a good faith effort to

comply with tax laws for the taxable years following the taxable

year to which the request for such relief relates (compliance

factor).

     The Commissioner may consider two other factors that, if

present in a case, will weigh in favor of granting relief:    (1)

Whether the nonrequesting spouse abused the requesting spouse

(abuse factor); and (2) whether the requesting spouse was in poor

mental or physical health at the time she signed the return or

at the time she requested relief (mental or physical health

factor).   Id. sec. 4.03(2)(b), 2003-2 C.B. at 299.   The absence

of either factor will not weigh against granting relief.     Id.
                               - 15 -

     In making our determination under section 6015(f), we shall

consider the factors set forth in Rev. Proc. 2003-61, sec. 4.03,

and any other relevant factors.    No single factor is to be

determinative in any particular case, and all factors are to be

considered and weighed appropriately.     See Haigh v. Commissioner,

T.C. Memo. 2009-140.

     1.    Marital Status

     Consideration is given as to whether the requesting spouse

is separated (whether legally separated or living apart) or

divorced from the nonrequesting spouse.     Rev. Proc. 2003-61, sec.

4.03(2)(a)(i), 2003-2 C.B. at 298.      Petitioner separated from Mr.

Stephenson on February 23, 2007, and they were divorced on June

5, 2008.    Accordingly, this factor weighs in favor of granting

relief.

     2.    Economic Hardship

     A requesting spouse suffers economic hardship if paying the

tax liability would prevent her from paying her reasonable basic

living expenses.24   Sec. 301.6343-1(b)(4)(i), Proced. & Admin.


     24
        In determining a reasonable amount for basic living
expenses, the Commissioner shall consider information provided by
the taxpayer, including: (1) The taxpayer’s age, employment
status and history, ability to earn, number of dependents, and
status as a dependent; (2) the amount reasonably necessary for
food, clothing, housing, utilities, medical expenses,
transportation, child support, and other necessities; (3) the
cost of living in the geographical area in which the taxpayer
lives; (4) the amount of property available to pay the taxpayer’s
expenses; (5) any extraordinary expenses, including educational
                                                   (continued...)
                               - 16 -

Regs.; Rev. Proc. 2003-61, sec. 4.02(1)(c), 4.03(2)(a)(ii),

2003-2 C.B. at 298.   Respondent contends that petitioner failed

to show that she would suffer economic hardship if not granted

relief.   We disagree.

     Petitioner currently cannot afford to pay her basic living

expenses.    She is unemployed and not receiving the $500 per month

of spousal maintenance that she is entitled to.     Her only asset

is her car, which she is currently paying off with money borrowed

from Mr. Thomas, and she owes money to her divorce attorney and

Mr. Thomas.

     Respondent argues that we should not consider petitioner’s

current employment status in making our determination.    He

reasons that petitioner’s unemployment is of her own volition and

that her past job experience shows that she can find work if

necessary.    While we understand respondent’s position, we believe

that requiring petitioner, who has no assets and whose most

recent job paid her $10 per hour, to pay a tax liability of more

than $66,00025 would cause her economic hardship.




     24
      (...continued)
expenses; and (6) any other factor that the taxpayer claims bears
on economic hardship and brings to the Commissioner’s attention.
Sec. 301.6343-1(b)(4)(ii), Proced. & Admin. Regs.
     25
        As of Oct. 9, 2007, the unpaid tax liability was
$66,129.21. The current amount of the unpaid liability is
substantially higher on account of more than 3 years of accrued
interest.
                                - 17 -

     Accordingly, the economic hardship factor weighs in favor of

granting relief.

     3.   Knowledge

     A third factor is whether the requesting spouse knew or had

reason to know that the nonrequesting spouse would not pay the

tax liability.     In making the determination whether the

requesting spouse had reason to know, consideration is given to,

among other things:     (1) The requesting spouse’s level of

education; (2) the requesting spouse’s degree of involvement in

the activity generating the income tax liability; (3) the

requesting spouse’s involvement in business and household

financial matters; (4) the requesting spouse’s business or

financial expertise; and (5) any lavish or unusual expenditures

compared with past spending levels.      Rev. Proc. 2003-61, sec.

4.03(2)(a)(iii)(C), 2003-2 C.B. at 298.      The presence of abuse by

the nonrequesting spouse may mitigate the requesting spouse’s

knowledge or reason to know that the nonrequesting spouse would

not pay the tax liability.     Id. sec. 4.03(2)(b)(i), 2003-2 C.B.

at 299.

     We believe that petitioner did not know or have reason to

know that Mr. Stephenson would not pay the tax liability.      Mr.

Stephenson controlled the couple’s finances, and petitioner was

not allowed access to any financial documents.      Mr. Stephenson

did not discuss with petitioner the filing of the return or
                                - 18 -

payment of the tax owed.   Finally, Mr. Stephenson earned a

substantial income in 1999 from which he had adequate funds to

pay the tax owed.   See Levy v. Commissioner, T.C. Memo. 2005-92

(finding the nonrequesting spouse’s substantial earnings to be an

important factor in holding that the requesting spouse did not

have knowledge or reason to know that the tax liability would not

be paid).

     Additionally, the factors stated in Rev. Proc. 2003-61, sec.

4.03(2)(a)(iii)(C), favor granting relief:   (1) Petitioner never

graduated from high school and failed the GED test three times;

(2) her involvement in the activities generating the income tax

liability was extremely limited; (3) she had no involvement in

business and household financial matters and limited business or

financial expertise; and (4) any expenditures were commensurate

with Mr. Stephenson’s income.

     Respondent cites Hayman v. Commissioner, 992 F.2d 1256 (2d

Cir. 1993), affg. T.C. Memo. 1992-228, for the proposition that

petitioner’s signature gave her constructive knowledge of the

information on the return and therefore reason to know that the

tax liability would not be paid.    In Hayman the Court of Appeals

for the Second Circuit dealt with whether the requesting spouse,

who signed the returns but did not review them, had constructive

knowledge of the suspiciously large deductions.    Id. at 1262.   In

holding that she did, the Court of Appeals stated that awareness
                              - 19 -

of such large deductions gave the requesting spouse reason to

know of the possibility of an understatement of tax liability.

Id.

      We believe that respondent’s reliance on Hayman is

misplaced.   In a deficiency case such as Hayman the question is

whether the requesting spouse knew or had reason to know of the

item giving rise to the deficiency.    In the matter presently

before the Court the question is not whether petitioner was aware

of the existing tax liability at the time she signed the return

but whether she knew or had reason to know at the time she signed

the return that Mr. Stephenson would not pay the tax liability.

      Respondent also argues that petitioner, because she earned

taxable income in 1999, had a duty to inquire into whether Mr.

Stephenson reported petitioner’s income on the return and paid

the appropriate taxes.   Respondent contends that petitioner’s

failure to satisfy her duty to inquire is enough for the Court to

hold that she knew or had reason to know that Mr. Stephenson

would not pay the tax liability.

      Respondent relies on Feldman v. Commissioner, T.C. Memo.

2003-201, affd. 152 Fed. Appx. 622 (9th Cir. 2005).26   In Feldman

the nonrequesting spouse handled the family’s finances and



      26
        Respondent also cites Motsko v. Commissioner, T.C. Memo.
2006-17, for support, but we stated in Motsko that the requesting
spouse’s duty to inquire was triggered after he became aware that
previous returns were being audited.
                              - 20 -

misrepresented to the requesting spouse the family’s financial

situation.   When the requesting spouse, a lawyer earning $16,000

per week, attempted to pay the outstanding tax liability, his

check was presented to the bank against insufficient funds.     We

held that at the time the joint return was filed the requesting

spouse had constructive knowledge that the outstanding tax

liability would not be paid because a reasonable person in the

requesting spouse’s position would have inquired into his

financial situation after receiving the bank statements from the

nonrequesting spouse that “reflected obvious inconsistencies, and

had dates printed in an irregular form.”     Id.

     Unlike the requesting spouse in Feldman, petitioner had no

apparent reason to doubt Mr. Stephenson’s ability to pay the tax

liability and no blatant factual inconsistencies to investigate.

     We also note that requiring petitioner to inquire into

whether Mr. Stephenson reported on the return the income she

earned could have put her at risk of abuse.    Petitioner’s efforts

to become more informed of what she was signing and questions

about their finances in general resulted in threats of violence

or verbal abuse from Mr. Stephenson.

     Accordingly, we hold that at the time petitioner signed the

joint return she had no knowledge or reason to know that Mr.

Stephenson would not pay the tax liability, and the knowledge

factor weighs in favor of granting relief.
                                - 21 -

     4.   Legal Obligation

     Mr. Stephenson is legally obligated to pay the outstanding

tax liability pursuant to the divorce decree.   This weighs in

favor of granting relief unless, as respondent argues, petitioner

knew or had reason to know at the time the divorce decree was

entered into that Mr. Stephenson would not pay the income tax

liability.   See Rev. Proc. 2003-61, sec. 4.03(2)(a)(iv), 2003-2

C.B. at 298.

     Respondent contends that petitioner knew or should have

known at the time the divorce decree was entered into that Mr.

Stephenson would not pay the 1999 tax liability because before

that date petitioner and respondent discussed Mr. Stephenson’s

failure to pay the 1999 tax liability and file a joint income tax

return for 2005.   We disagree.

     We do not believe that petitioner’s awareness of Mr.

Stephenson’s failure to pay the tax liability in April 2007 (as

opposed to when the divorce decree was finalized) gave her reason

to know that he would not pay the tax liability at the time the

divorce decree was finalized.

     We also disagree with respondent that petitioner’s knowledge

of Mr. Stephenson’s failure to file a joint income tax return for

2005 gave her knowledge or reason to know that Mr. Stephenson

would not pay the unpaid tax liability required by the divorce

decree.   See Levy v. Commissioner, T.C. Memo. 2005-92 (finding
                                  - 22 -

that requesting spouse did not know or have reason to know that

nonrequesting spouse would not comply with his legal obligation

to pay unpaid tax liability despite history of noncompliance by

nonrequesting spouse).     The divorce decree was the product of

arm’s-length negotiations between petitioner and Mr. Stephenson,

each of whom was represented by an attorney.

       Accordingly, we hold that the legal obligation factor weighs

in favor of granting relief.

       5.   Significant Benefit

       A fifth factor is whether the requesting spouse received a

significant benefit (beyond normal support) from the unpaid tax

liability.     Rev. Proc. 2003-61, sec. 4.02(a)(v), 2003-2 C.B. at

299.    “A significant benefit is any benefit in excess of normal

support.”     Sec. 1.6015-2(d), Income Tax Regs.   “Normal” support

is measured by the parties’ circumstances.     Estate of Krock v.

Commissioner, 93 T.C. 672, 678 (1989).

       Respondent contends that petitioner significantly benefited

from the unpaid tax liability in the form of the car she drove

and the highrise buildings and their amenities that she took

advantage of.     In determining whether this constitutes

significant benefit (beyond normal support) we must consider that

petitioner and Mr. Stephenson had net income of almost $150,000

in 1999 and Mr. Stephenson continued to be successful for a

number of years.     See Bell v. Commissioner, T.C. Memo. 1989-107
                              - 23 -

(stating that net income needs to be considered in determining

whether expenditures go beyond normal support).

     Mr. Stephenson purchased the BMW that petitioner drove at

the height of his success.   We do not believe that Mr.

Stephenson’s purchase of the BMW and petitioner’s driving of it

to and from work is a benefit to petitioner that goes beyond

normal support for a couple in their financial situation.

Moreover, the car was not a gift to petitioner or purchased in

her name.

     We also do not believe that petitioner’s highrise living in

Dallas and San Diego amounts to a significant benefit from the

unpaid tax liability.   Mr. Stephenson was successful, and renting

condominiums for himself and petitioner to live in does not

provide petitioner with a benefit beyond normal support.    The

fact that the condominiums had a gym and/or swimming pool that

petitioner took advantage of does not change this result.

     Accordingly, the significant benefit factor weighs in favor

of granting relief.

     6.   Compliance

     Respondent argues that the compliance factor weighs against

granting relief because:   (1) Petitioner and Mr. Stephenson’s

2004 joint income tax return contained a deficiency; (2)

petitioner failed to file a 2005 Federal income tax return; and

(3) petitioner failed to timely pay her 2006 Federal income tax.
                              - 24 -

     We do not believe that the 2004 return’s deficiency or the

failure to file a 2005 return shows that petitioner has not made

a good a faith effort to comply with the tax laws.     Mr.

Stephenson controlled the couple’s finances in those years just

as he did in 1999, and petitioner was subject to the same type of

abuse.   Additionally, the IRS granted petitioner innocent spouse

relief for 2004, and petitioner filed a 2005 tax return as soon

as she learned that Mr. Stephenson did not file a return for that

year.

     With respect to the 2006 tax year, we believe that

petitioner made a good faith effort to timely pay even though her

payment was made after the due date.     She timely filed her 2006

return and believed that the IRS would send her a bill when the

payment’s due date approached.   The IRS did send petitioner a

bill, which she paid immediately; but it was sent after the due

date and her payment was untimely.     In this situation

petitioner’s failure to timely pay does not preclude her from

having made a good faith effort to comply with the tax laws.

     Finally, since tax year 2007 petitioner’s compliance has

been perfect.   She timely filed her 2007 Federal income tax

return and timely paid the tax owed.     She also timely filed her

2008 and 2009 Federal income tax returns and received refunds for

both years.
                               - 25 -

     Accordingly, the compliance factor weighs in favor of

granting relief.

     7.   Abuse

     Abuse by the nonrequesting spouse favors relief.     Rev. Proc.

2003-61, sec. 4.03(2)(b)(i).    Abuse need not be physical.   The

Court has found that mental, emotional, and verbal abuse may

incapacitate a requesting spouse in the same way as physical

abuse.    Nihiser v. Commissioner, T.C. Memo. 2008-135.   Claims of

abuse require substantiation or specificity in allegations.     See

id.; Knorr v. Commissioner, T.C. Memo. 2004-212.

     Mr. Stephenson abused petitioner throughout their marriage.

During trial petitioner provided specific examples of abuse,

including a time when Mr. Stephenson threatened to kill her or

himself if she left him and times when Mr. Stephenson threw items

at her.    Mr. Stephenson regularly humiliated petitioner in front

of his family and their friends and demeaned her when she asked

questions.    Mr. Thomas corroborated some of petitioner’s

testimony by credibly testifying that petitioner had bruises on

her body and told him that she was in an abusive relationship.

     Respondent argues that petitioner’s testimony is not

credible because she did not document any of the abuse.      We find

that petitioner credibly testified to specific allegations of

abuse that took place before she moved to San Diego and believe

that Mr. Thomas’ testimony substantiates petitioner’s allegations
                               - 26 -

of abuse that took place while she was living in San Diego.      See

Drayer v. Commissioner, T.C. Memo. 2010-257 (weighing abuse

factor in favor of granting relief despite requesting spouse’s

failure to document abuse).

      Accordingly, the abuse factor weighs in favor of granting

relief.

      8.   Mental or Physical Health

      There is no evidence that petitioner was in poor mental or

physical health at any relevant time.     Thus, this factor is

neutral.

D.   Conclusion

      In summary, seven factors favor relief and one factor is

neutral.    After weighing the testimony and evidence in this fact-

intensive case, we conclude that it is inequitable to hold

petitioner liable for the 1999 joint tax liability.      Accordingly,

we relieve petitioner from joint tax liability for tax year 1999.

      We have considered all arguments made in reaching our

decision and, to the extent not mentioned, we conclude that they

are moot, irrelevant, or without merit.

      To reflect the foregoing,


                                            Decision will be entered

                                       for petitioner.
