                  T.C. Summary Opinion 2007-215



                     UNITED STATES TAX COURT



                  JACK D. ELLER, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 23041-04S.             Filed December 27, 2007.



     I. Jay Katz, for petitioner.

     Thomas M. Rath, for respondent.


     CARLUZZO, Special Trial Judge:    This case was heard

pursuant to the provisions of section 7463.1   Pursuant to section

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



     1
        Unless otherwise indicated, section references are to
the Internal Revenue Code of 1986, as amended, in effect for
the relevant period. Rule references are to the Tax Court
Rules of Practice and Procedure.
                                 - 2 -

other court, and this opinion shall not be cited as precedent for

any other case.

     In a notice of deficiency issued to petitioner on September

10, 2004, respondent determined deficiencies as follows:

                  Year                     Amount

                  1992                    $14,227
                  1993                     13,146
                  1994                      9,856

     Petitioner does not challenge the amount of the deficiency

for any of the years in issue.    Instead, petitioner claims relief

from the deficiency for each year under section 6015.

                           Background

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

the time the petition was filed, petitioner resided in Delaware.

     The circumstances surrounding the determinations of the

above-referenced deficiencies are summarized in the following

excerpt taken from United States v. Gricco, 277 F.3d 339, 346-348

(3d Cir. 2002):

          From 1990 to 1994, Anthony Gricco was the regional
     manager for private companies that contracted with the
     Philadelphia Parking Authority to operate the parking
     facilities at the Philadelphia International Airport.
     Gricco was responsible for the general operation of the
     facilities, including the hiring of employees and the
     collection of parking fees. Michael McCardell,
     Gricco’s brother-in-law, was Gricco’s chief assistant.
     McCardell oversaw the day-to-day activities of the
     tollbooths and picked up money from the cashiers at the
     end of their shifts.

          The parking facilities at the airport used
     automated ticket machines as well as cashiers. Upon
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entering a lot, a customer would take a ticket from a
machine. The date and time would be printed on the
ticket and encoded in the magnetic strip on the back.
To leave the lot, the customer would drive to a
tollbooth and the ticket would be put into another
machine. This machine would read the date and time of
issuance, calculate the length of time that the
customer had parked in the lot, and display the parking
fee owed. The customer would then pay the cashier in
the tollbooth. At the end of a shift, each cashier
would bundle together the tickets and cash received and
put them in a brown bag labeled with the cashier’s name
and the number of the tollbooth. Each cashier would
also place in the bag a tape from the ticket-reading
machine that provided a record of the tickets that the
machine had processed. The supervisors then would
forward the bags to Gricco’s assistants.

     In early 1990, Gricco, McCardell, and others made
a plan to steal money by substituting customers’ real
tickets with replacement tickets showing false dates
and times of entry. A customer who had parked in the
lot for a long period of time would have a real ticket
reflecting a high parking fee. On leaving the lot, the
customer would pay this fee to the cashier. However,
instead of inserting the real ticket into the ticket-
reading machine, a cashier participating in the scheme
would insert a replacement ticket, and the machine
would calculate the parking fee based on the false date
and time stamped on the replacement ticket. This
replacement ticket would indicate that the customer had
parked for only a short period of time, and thus the
parking fee would be much lower. The thieves would
pocket the difference between the amount paid by the
customer and the amount of the fee shown on the
replacement tickets.

     Michael Flannery, a technician for the company
responsible for maintaining the ticket machines,
provided the replacement tickets. Flannery also
disabled the fare displays on the ticket-reading
machines so that customers could not see that the
parking fees that they were paying were higher than the
fees recorded by the machines.

     Flannery initially supplied Gricco with
replacement tickets by removing tickets from the
ticket-issuing machines and then resetting the counters
                         - 4 -

on those machines. In the beginning, Flannery obtained
30 tickets a day using this method, and one cashier,
enlisted by Gricco, used the replacement tickets to
steal cash. Gricco scheduled either McCardell or David
Million, another supervisor, to oversee the tollbooth
plaza at which this cashier worked. Gradually, more
corrupt cashiers were enlisted, and eventually Flannery
began printing counterfeit tickets.

      Gricco, McCardell, Million, and Flannery expanded their
scheme over the next four years. At first, Gricco enlisted
cashiers who had engaged in a similar but smaller scheme in
1988. Eventually Gricco recruited about 15 other cashiers
to participate. Flannery delivered the counterfeit tickets
that he manufactured to Gricco, McCardell, or McCardell’s
wife.    McCardell then distributed the replacement tickets
to the corrupt cashiers, and at the end of their shifts,
McCardell picked up the stolen money and forwarded it to
Gricco, who distributed the money among the participants.
The cashiers received a portion of the proceeds stolen
during their shifts, and the rest was divided into four
equal shares for Gricco, McCardell, Million, and Flannery.

     The leading participants in the scheme did not
report their unlawful income on their federal income
tax returns. Gricco kept his money in a safe, loaned
cash to others and received repayments in the form of
checks or money orders, gave cash to family members,
and placed real estate under his family members’ names.
Through a real estate broker named Ludwig Cappozi,
Gricco purchased several properties for cash. Capozzi
also engaged in real estate transactions with
McCardell’s wife, who used cash to purchase properties
under both her own and McCardell’s name.

     The cashiers involved in the scheme also failed to
report their unlawful income on their income tax
returns. They did not deposit their embezzled funds
into banks for fear of being detected by the Internal
Revenue Service. Gricco cautioned some cashiers not to
put their money in banks, and he advised Flannery and
Million to invest in real estate through Capozzi.

     The scheme ended in September 1994, when the
Philadelphia District Attorney’s Office executed search
warrants at the airport. In July 1996, the
Commonwealth of Pennsylvania brought state charges of
theft, forgery, and unlawful use of a computer against
                                - 5 -

     Gricco, McCardell, Flannery, Million, and numerous
     cashiers. The cashiers waived their right to a jury
     trial and were convicted in the Philadelphia Court of
     Common Pleas.   After a three-day jury trial, Gricco,
     McCardell, and Million were acquitted, and the judge
     dismissed Flannery’s case.

          In April 1999, a federal grand jury returned an
     indictment against Gricco, McCardell, Million, and
     Flannery for conspiracy to defraud the United States by
     obstructing the lawful function of the Internal Revenue
     Service in the collection of federal income taxes, in
     violation of 18 U.S.C. §371; tax evasion, in violation
     of 26 U.S.C. §7201; and making false federal income
     tax returns, in violation of 26 U.S.C. §7206(1). Prior
     to trial, Million and Flannery pleaded guilty and
     agreed to testify for the prosecution. Gricco and
     McCardell proceeded to trial.

          The jury found Gricco and McCardell guilty on all
     counts. The government submitted a sentencing
     memorandum asserting that the total amount stolen
     between 1990 and 1994 was $3.4 million and that the tax
     loss was $952,000 (i.e., 28% of $3.4 million).

     One of the cashiers referenced above is Carol Pulgini

(petitioner’s former spouse).   Her involvement in the above-

described scheme netted her no less than $35,000 during 1992,

$32,200 during 1993, and $23,100 during 1994 (the illegal

income).   Needless to say, her employment with the parking

authority was terminated when her involvement was discovered.

She was tried, convicted, and incarcerated for various criminal

charges arising from her involvement in the scheme.

     Petitioner met his former spouse in December 1990.   They

began living together in petitioner’s house in August 1991 when

petitioner’s former spouse was pregnant with their first child,

who was born later that year.   Petitioner and his former spouse
                                 - 6 -

married in June 1992, when she was pregnant with their second

child, born the next year.    They were divorced in May 2001.

     Petitioner and his former spouse filed a joint Federal

income tax return for each year in issue.    The illegal income is

not included in the income reported on any of those returns.

Petitioner was not aware of his former spouse’s involvement in

the above-described scheme at the time he signed any of those

income tax returns.

     Petitioner agrees that for each year in issue, respondent

has properly determined the amount of the deficiency attributable

to the omission of the illegal income.     Nevertheless, according

to petitioner, he should be relieved from liability for those

deficiencies under section 6015.

                              Discussion

     In general, spouses filing a joint Federal income tax return

are jointly and severally responsible for the full income tax

liability ultimately determined with respect to the year for

which the return was filed.    Sec. 6013(d)(3); Butler v.

Commissioner, 114 T.C. 276, 282 (2000).     “Section 6015, however,

provides various means by which a spouse can be relieved of this

joint and several obligation.”     Alt v. Commissioner, 119 T.C.

306, 311 (2002), affd. 101 Fed. Appx. 34 (6th Cir. 2004).

     One means is provided in section 6015(c).    Upon election of

its application by the taxpayer, that section limits an
                                 - 7 -

individual’s liability for a deficiency to the portion of the

deficiency properly allocable to that individual under section

6015(d).   In general, an item that gives rise to a deficiency on

a joint Federal income tax return will be allocated to the

individuals who file the return in the same manner as that item

would have been allocated had those individuals filed separate

returns.   Sec. 6015(d)(3)(A).   In this case, the deficiency for

each year in issue is entirely attributable to petitioner’s

former spouse.

     Petitioner’s section 6015(c) election has been made in this

proceeding.   Respondent agrees that petitioner is eligible to

make the election and further agrees that the election is timely.

See sec. 6015(c)(3)(A) and (B).    Respondent argues, however, that

petitioner’s section 6015(c) election is not valid with respect

to any of the deficiencies here in dispute because at the time

petitioner signed the return for each year, he had “actual

knowledge” of the “item giving rise to” the deficiency not

allocable to him under section 6015(d).    Sec. 6015(c)(3)(C).

Respondent bears the burden of proof on the point.    Sec.

6015(c)(2).

     Petitioner testified that at the time he signed each return,

he was unaware of his former spouse’s participation in the

parking lot scheme, and he was further unaware of any of the

illegal income she received as a result.    Petitioner’s former
                                 - 8 -

spouse testified that although petitioner did not know about her

illegal activities, he was aware of the illegal income.       As

between the two, we find petitioner’s version of the events to be

the more credible.   Other evidence supports our finding in this

regard.

     Petitioner’s liability for each deficiency here in dispute

is subject to his election under section 6015(c) for each year in

issue.    Under the circumstances, we need not address petitioner’s

claim for relief under other provisions of section 6015.

     To reflect the foregoing,


                                         Decision will be entered

                                 under Rule 155.
