                            T.C. Memo. 1997-22



                          UNITED STATES TAX COURT



                      DANIEL C. NOONAN, Petitioner v.
               COMMISSIONER OF INTERNAL REVENUE, Respondent


       Docket No. 6722-95.                       Filed January 14, 1997.


       Daniel C. Noonan, pro se.


       Gregory Powers, for respondent.


                            MEMORANDUM OPINION


       NAMEROFF, Special Trial Judge:     This case was heard pursuant

to the provisions of section 7443A(b)(3)1 and Rules 180, 181, and

182.       Respondent determined a deficiency in petitioner's 1988



       1
        Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the year at issue. All
Rule references are to the Tax Court Rules of Practice and
Procedure.
                               - 2 -


Federal income tax in the amount of $3,162, plus an addition to

tax under section 6651(a)(1) in the amount of $791.

     The issues for decision are:    (1) Whether petitioner is

entitled to joint filing status, and (2) whether petitioner is

liable for the addition to tax under section 6651(a)(1) for

failure to timely file his return.

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

found.   The stipulation of facts, the supplemental stipulation of

facts, and the attached exhibits are incorporated herein by this

reference.   At the time of the filing of the petition, petitioner

resided in Thousand Oaks, California.

     Petitioner and Melissa Noonan (Mrs. Noonan) were married in

1973 and have 4 children.   From 1973 through 1985, petitioner and

Mrs. Noonan filed joint Federal income tax returns.

     In May 1987, petitioner and Mrs. Noonan separated.     Sometime

in 1987, Mrs. Noonan commenced judicial proceedings for divorce.

During 1988, Mrs. Noonan and the children resided with Mrs.

Noonan's father.   Petitioner and Mrs. Noonan did not reside

together at any time during 1988.2     After a long and bitter

proceeding, the divorce between petitioner and Mrs. Noonan became

final in 1991.



     2
        However, there is no indication in the record that they
were legally separated during 1988 under a decree of separate
maintenance. See sec. 6013(d)(2).
                               - 3 -


     On or about April 15, 1989, petitioner filed for an

extension to file the 1988 Federal income tax return together

with a payment of $469.   On the extension form, petitioner

indicated that he would claim joint filing status.

     On October 5, 1990, after substantial negotiation,

petitioner and Mrs. Noonan signed an Indemnification and Hold

Harmless Agreement (the indemnification agreement).    The

indemnification agreement recited that the Noonans had not filed

tax returns for the years 1986, 1987, and 1989, and that they

agreed to file joint tax returns for 1986 and 1987 reflecting

refunds due.   According to the indemnification agreement,

petitioner agreed to accept sole financial responsibility for all

taxes, interest, and penalties connected with the 1988 Federal

return in exchange for Mrs. Noonan's agreement to sign a 1988

Federal tax return claiming joint filing status.   Petitioner and

Mrs. Noonan further agreed that a 1988 California State income

tax return (the California return) would be filed after execution

of the indemnification agreement, but that a 1988 Federal return

would not be filed at that time because petitioner was

financially unable to pay the indicated liability.    Petitioner

and Mrs. Noonan further agreed that Mrs. Noonan would sign a

completed 1988 joint Federal return which would be retained by

Hill, Farrer, & Burrill (the law firm) until petitioner notified

the law firm that he was able to pay the entire tax liability.
                                - 4 -


According to the indemnification agreement, when the law firm

received money to pay the tax liability, it would then mail the

completed and executed 1988 Federal return to the Internal

Revenue Service (IRS).

     When Mrs. Noonan signed the indemnification agreement, she

intended to file a joint 1988 Federal return provided petitioner

paid all the tax liabilities associated with taxable year 1988.

She would not have signed the indemnification agreement without

petitioner's agreement to pay the tax liabilities for 1988.

     When petitioner and Mrs. Noonan signed the indemnification

agreement, Ron Pearson (Mr. Pearson) at the law firm was Mrs.

Noonan's tax counsel.    After the indemnification agreement was

signed, petitioner provided Mr. Pearson with a completed 1988

Federal return.   Mr. Pearson reviewed the completed 1988 Federal

return and supporting documentation with Mrs. Noonan.    Petitioner

and Mrs. Noonan signed the completed 1988 Federal return, and it

was retained by the law firm.    Sometime in 1990, Mr. Pearson left

the law firm and gave the completed and executed 1988 Federal

return to Mrs. Noonan's father, who was an attorney of counsel to

the law firm.

     On October 26, 1990, the joint California return was filed

with the Franchise Tax Board in Sacramento, California.    The

California return was signed by petitioner and Mrs. Noonan.      A
                                 - 5 -


copy of the signed joint Federal return was filed with the

California return.

     Petitioner anticipated receiving a distribution of funds

from the divorce proceeding with which he would pay the indicated

tax liability for 1988.   He confirmed this intention in letters

to Mr. Pearson (with copies to his ex-wife) dated April 2, 1991

and August 22, 1991.3   On February 15, 1992, he wrote to Mrs.

Noonan as follows:

     Now that the distribution of property is complete, I am
     again notifying you that I am prepared to file the 1988
     Federal tax return. As you know, Ron Pearson gave you
     the original some time last year which he confirmed to
     me over the phone.

     Let's get this finalized.    Let me know when we can do this.

     On March 3, 1992, he again wrote to Mrs. Noonan as follows:

     Since you continue to tell me that you cannot locate
     the 1988 Federal tax return, I must ask that you do
     everything in your power to locate it. It is important
     to get this filed and behind us.

     Please let me know when you find it or if there is
     anything I can do to move this along.

     Petitioner also testified that he telephoned Mrs. Noonan and

unsuccessfully requested the completed and executed 1988 Federal

return so he could file it.   Petitioner never provided the law

firm or Mrs. Noonan with the funds to cover the 1988 tax

liability.

     3
        On June 24, 1991, petitioner received a letter from the
IRS indicating that he was subject to backup withholding in
connection with the failure to file a 1988 Federal return.
                                - 6 -


       According to petitioner, he filed a 1988 Federal return in

March 1992 without payment of the tax liability shown thereon.

Petitioner has no proof of mailing to show that he filed a 1988

Federal return at that time.    The IRS has no record of receipt of

that return from petitioner.

       In 1992, Carla Burton (Ms. Burton), a revenue officer at the

Oxnard district office, began a taxpayer delinquency

investigation to secure a 1988 Federal income tax return from

petitioner.    According to Ms. Burton, if there is no return on

file, the usual procedure is to request an original return from

the taxpayer.    If the return subsequently submitted by the

taxpayer is complete, the information appears accurate, and there

are original signatures on the return, the usual procedure is to

process the return by forwarding it to the teller function of the

IRS.    If the taxpayer advises her that a return has been filed,

she would then request a copy of the return so that she could

examine the return to determine if there is a mistake, such as a

discrepancy in the Social Security number, on the return.      The

copy would not be processed because it would not contain original

signatures.    Ms. Burton typically documents in her notes whether

she received an original return from the taxpayer.

       Ms. Burton attempted to secure the return from petitioner,

rather than Mrs. Noonan, because his address was contained in her

records.    On May 20, 1992, Ms. Burton went to petitioner's
                               - 7 -


residence to secure a 1988 Federal return.    Petitioner was not at

the residence, so Ms. Burton left a calling card instructing

petitioner to telephone her the next day.    On May 21, 1992,

petitioner telephoned Ms. Burton and agreed to send a 1988

Federal return to her.   According to Ms. Burton's investigation

notes, on May 27, 1992, Ms. Burton received a 1988 Federal return

from petitioner.   That return (the May return) contained

petitioner's original signature and a copy of Mrs. Noonan's

signature.

     On May 28, 1992, petitioner advised Ms. Burton to obtain

Mrs. Noonan's original signature on the May return, and on June

1, 1992, Ms. Burton mailed a letter and copy of the May return to

Mrs. Noonan.   In the letter, Ms. Burton advised Mrs. Noonan of

the delinquency and missing 1988 Federal return.    Ms. Burton also

requested Mrs. Noonan's signature on the copy of the May return.

     On June 4, 1992, Mrs. Noonan telephoned Ms. Burton and told

her that she did not want to sign the 1988 return submitted by

petitioner because she did not know if the information on the

return was correct and because she did not want to incur any

liability related to that return.   Mrs. Noonan also informed Ms.

Burton that she received no income in 1988.    Mrs. Noonan did

inquire at that time as to the status of the joint refunds for

1986 and 1987.   During their conversation, Ms. Burton allegedly

advised Mrs. Noonan to file a separate return even though she had
                                - 8 -


no income in 1988.    Mrs. Noonan testified that if she had known

that petitioner had paid all tax liabilities related to taxable

year 1988, she would have signed the 1988 Federal return

submitted by petitioner.

       On June 9, 1992, Ms. Burton mailed a letter to petitioner

advising him that she was unable to obtain Mrs. Noonan's

signature and that he should file a 1988 Federal return as head

of household or married filing separate.    Ms. Burton did not file

the May return for the Noonans.

       On June 12, 1992, Ms. Burton mailed Mrs. Noonan a Form 1040

for taxable year 1988.    Prior to mailing the Form 1040, Ms.

Burton filled in the following information:    Mrs. Noonan's name

and address, her Social Security number, and zero gross income.

Mrs. Noonan completed the Form 1040 and returned it to the IRS.

Mrs. Noonan's 1988 Federal return was received by the IRS on July

1, 1992.    On the return, Mrs. Noonan reported no income, claimed

one exemption, and claimed married filing separate status.

       On November 19, 1992, petitioner received a letter from the

IRS indicating that a 1988 Federal return had not been filed by

him.    On January 3, 1993, petitioner filed another copy of the

1988 Federal return (the January return) reflecting his original

signature and a copy of the signature of Mrs. Noonan.    The tax

shown thereon was paid.    The original Form 1040 prepared in

conjunction with the indemnification agreement and retained by
                                - 9 -


the law firm, the May return, and the January return are

identical in content.   All three reflect the claiming of joint

filing status as well as an exemption for Mrs. Noonan, in

addition to those for petitioner and the four children.    The

parties have stipulated that the May and January returns each

have the original signature of petitioner and a copy of Mrs.

Noonan's signature.

     In February 1993, petitioner received notification from the

IRS that the January return had been received.   According to this

letter, petitioner had claimed an incorrect amount as estimated

tax payment credits and still owed an additional amount due to

additions to tax for failure to timely file and pay estimated tax

and interest.   Between June 7, 1993, and May 23, 1994, a refund

from Mrs. Noonan's 1992 Federal income tax return and additional

amounts from petitioner's and Mrs. Noonan's separate 1993 Federal

returns were used to satisfy assessed additions to tax and

interest for 1988.    On November 21, 1994, petitioner received a

letter from the IRS indicating that all taxes, additions to tax,

and interest for the 1988 taxable year had been paid.

Filing Status

     A husband and wife may file a joint return.   Sec. 6013.    A

joint return generally must be signed by both spouses.    Sec.

1.6013-1(a)(2), Income Tax Regs.   However, we have held that a

return may be a joint return even though the signature of one
                              - 10 -


spouse is missing, if both spouses intended to file a joint

return.   Estate of Campbell v. Commissioner, 56 T.C. 1, 12-14

(1971); Federbush v. Commissioner, 34 T.C. 740, 754-758 (1960),

affd. 325 F.2d 1 (2d Cir. 1963); Hoyle v. Commissioner, T.C.

Memo. 1994-592.   Therefore, the resolution of this issue depends

upon whether Mrs. Noonan intended that the 1988 return filed by

petitioner constitute their joint return.4

     It is clear that Mrs. Noonan, at all times up until sometime

in 1992 at the earliest, intended to file a joint Federal return

with petitioner for 1988.   It was so agreed in the

indemnification agreement, the joint return was prepared and

signed by Mrs. Noonan, and a copy was filed with the joint

California return.   Petitioner had attempted to get the law firm

or Mrs. Noonan to file the return when he was financially able,

but was unsuccessful in getting any cooperation.

     Petitioner insists that Mrs. Noonan was uncooperative in

locating the completed and executed 1988 return and that she

refused to sign the May return (or submit the original 1988

return) due to their bitter divorce.   We have previously held

     4
        We do not consider sec. 6013(b) to affect this issue.
There does not seem to be any valid reason why Ms. Burton was
unable to file the May return; respondent had no difficulty
filing the identical January return. Mrs. Noonan was not
obligated to file a 1988 return, and the document she submitted
reflected nothing--no income, liability, withholding, nor
credits. Nevertheless, if relevant to consideration of this
issue, we deem the May return to have been petitioner's return,
and therefore sec. 6013(b)(2) does not control.
                                - 11 -


that a spouse's refusal to sign a joint return, for reasons

unrelated to the return, does not preclude the return from

qualifying as a joint return.    Federbush v. Commissioner, supra.

Moreover, Mrs. Noonan allegedly refused to sign the May return

she had received from Ms. Burton because of her belief that the

return might contain inaccuracies.       This excuse is not convincing

in that she could have easily compared it to the original in her

father's possession and observed that it was exactly the same.

Her other excuse, that she did not want to be held liable for any

deficiencies relating to the return, is equally not convincing in

that she has an adequate remedy in contract law, should it become

necessary.   We think that her effort to file a separate return

when she was not liable to do so was an effort (with or without

Ms. Burton's cooperation and advice) to frustrate petitioner's

attempt to file the joint return pursuant to their prior

agreement.   Her testimony to the contrary was unpersuasive.

     We must, however, consider the effect of the requirement in

the indemnification agreement that petitioner submit funds to the

law firm to cover the tax liability before the law firm would be

responsible for filing the return.       This is a "condition

precedent" under contract law and failure to comply therewith

usually voids the contract obligation.5

     5
        In California, a property settlement agreement is a
contract, and the rules of contract law apply in its
                                                   (continued...)
                                - 12 -


     In contract law, a tender is an offer of performance.    The

tender, when properly made, has the effect of placing the other

party in default if he refuses to accept it, and the party making

the tender may rescind, or sue for breach of contract or for

specific performance, where this remedy is available.    The tender

must be for full performance at a proper time and place.    It must

be timely, unconditional, and in good faith.    If the contract

calls for the delivery of some specific thing, actual production

of it at the time of tender is not necessary.    Cal. Civ. Proc.

Code sec. 1496 (West 1982).   The party must merely be able to

produce it and must do so when the offer is accepted.    An offer

in writing to pay money or to deliver a written instrument or

specific personal property is, if unaccepted, equivalent to

actual production.   Cal. Civ. Proc. Code sec. 2074 (West 1983).

Finally, the person to whom tender is made must specify any

objections he may have at the time or defects in form or method

are waived.   Cal. Civ. Proc. Code sec. 2076 (West 1983).   See

generally, 1 Witkin, Summary of Cal. Law, Contracts, secs. 714,

716, and 717, (9th ed. 1987).

     In the instant case, petitioner did everything possible he

could do short of placing the money for the tax liability in Mrs.

     5
      (...continued)
interpretation and enforcement. Cal. Civ. Proc. Code sec. 1635
(West 1985); In re Marriage of Benjamins, 26 Cal. App. 4th 423
(1994).
                               - 13 -


Noonan's hands, which, in view of their animosity toward each

other, would not have been a reasonable thing to do.    Mr. Pearson

was no longer at the law firm, and payment to the law firm would

not be reasonable, inasmuch as the original 1988 tax return was

no longer at the law firm.   Petitioner had to deal with Mrs.

Noonan.   He wrote to her, advised that he was ready and able to

pay the tax (which he was), and requested the return.

Apparently, she first stated she could not find it and then

refused to turn it over.    Under these circumstances, petitioner

complied with the terms of the indemnification agreement.   His

tender (offer to pay the tax) was unreasonably rejected, and,

therefore, the condition precedent has been satisfied.

     Accordingly, we need not consider whether to attribute to

Mrs. Noonan an intent to file jointly based upon the inclusion of

her share of community income in the return submitted by

petitioner, where de minimis community income may have been

included in the return.    See Januschke v. Commissioner, 48 T.C.

496 (1967); Heim v. Commissioner, 27 T.C. 270 (1956), affd. 251

F.2d 44 (8th Cir. 1958).
                             - 14 -


     Based on the record, we conclude that Mrs. Noonan intended

to file a joint return with petitioner for 1988.   Thus,

petitioner is entitled to joint filing status for 1988.6


                                        Decision will be entered

                                   for petitioner.




     6
        In view of our conclusion on the first issue, the sec.
6651 issue is moot and requires no further discussion.
