                         T.C. Memo. 2004-57



                       UNITED STATES TAX COURT



                PAMELA J. ELLISON, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 11718-02.             Filed March 9, 2004.


     Terri A. Merriam, Wendy S. Pearson, and Jennifer A. Gellner,

for petitioner.

     Margaret A. Martin, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     VASQUEZ, Judge:    Respondent determined that petitioner did

not qualify for relief from joint and several liability pursuant

to section 6015(b), (c), or (f).1   The issue for decision is


     1
        Unless otherwise indicated, all section references are to
the Internal Revenue Code, and all Rule references are to the Tax
                                                   (continued...)
                               - 2 -

whether petitioner is entitled to relief from joint and several

liability pursuant to section 6015(b) or (f) for 1982, 1983,

1984, 1985, and 1986.2

                         FINDINGS OF FACT

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

The first stipulation of facts, second stipulation of facts,

third stipulation of facts, and the attached exhibits are

incorporated herein by this reference.   At the time she filed the

petition, petitioner resided in Monroe, Michigan.

Petitioner and Her Husband

     Petitioner has a high school education that, since 1991, she

has supplemented with some college courses in bank management.

     Petitioner married Don Ellison (Mr. Ellison) in 1971.    As of

the date of trial, petitioner and Mr. Ellison were married and

living together.   Mr. Ellison is currently employed as an

inspector at the Ford Motor Co.

     From 1971 to 1988, petitioner mainly worked part-time jobs.

In 1986, however, she worked full time as a bank teller.     Since

1990, petitioner has worked full time as a collections supervisor

at a financial institution.




     1
      (...continued)
Court Rules of Practice and Procedure.
     2
        In her petition, petitioner sought relief pursuant to
sec. 6015(b) and (f). Accordingly, sec. 6015(c) is not in issue.
                                - 3 -

     As of the time of trial, petitioner was 48 years old and in

good health.

Petitioner’s Relationship With Mr. Ellison

     Mr. Ellison did not conceal anything from petitioner.     Mr.

Ellison did not deceive petitioner.     Mr. Ellison did not hide, or

try to hide, any information or documents from petitioner.

     Mr. Ellison never threatened or coerced petitioner into

making investments, signing their tax returns, or signing checks.

Mr. Ellison did not abuse petitioner.

Hoyt Partnerships

     Walter J. Hoyt III and some members of his family were in

the business of creating tax shelter limited partnerships for

their cattle breeding operations (Hoyt partnerships).      As part of

their services, the Hoyt organization also prepared the

investor’s tax returns.    For a description of the Hoyt

organization and its operation, see Bales v. Commissioner, T.C.

Memo. 1989-568; see also River City Ranches #1 Ltd. v.

Commissioner, T.C. Memo. 2003-150; Mekulsia v. Commissioner, T.C.

Memo. 2003-138; River City Ranches #4, J.V. v. Commissioner, T.C.

Memo. 1999-209, affd. 23 Fed. Appx. 744 (9th Cir. 2001).

Investment in DGE 1984-2

     Around 1985, Mr. Ellison was working in construction.     He

heard about the Hoyt partnerships from his co-workers.     In the

fall of 1985, he told petitioner about the Hoyt partnerships.
                               - 4 -

Mr. Ellison talked with petitioner about the Hoyt partnerships

and showed her Hoyt partnerships promotional materials.

Petitioner attended a Hoyt investor meeting.

     Petitioner was not interested in investing in the Hoyt

partnerships.   Petitioner was skeptical regarding how an

investment in the Hoyt partnerships would reduce her tax

liability and would generate large tax refunds.   Petitioner did

not think it would work.

     Mr. Ellison sought advice from an attorney about the Hoyt

partnerships.   The attorney told Mr. Ellison that it was a risky

investment, but that if the Hoyt organization did what it said it

would do that it was legal.

     Mr. Ellison told petitioner that he investigated the Hoyt

partnerships.   Petitioner did not know, or ask Mr. Ellison, who

he had talked to or how he had obtained his information (i.e.,

whether it was from an attorney, a tax professional, someone

outside or inside the Hoyt organization, a co-worker of Mr.

Ellison, etc.).   Petitioner never suggested seeking the advice of

someone outside the Hoyt organization regarding the Hoyt

partnerships.

     Mr. Ellison persuaded petitioner to invest in the Hoyt

partnerships.   There was no hostility or threats.   Mr. Ellison

did not force petitioner to invest in the Hoyt partnerships.

Petitioner signed the Hoyt partnerships investment documents.      In
                                 - 5 -

1985, petitioner and Mr. Ellison invested in Durham Genetic

Engineering 1984-2 (DGE 1984-2), one of the Hoyt partnerships.3

     In 1985, petitioner and Mr. Ellison paid no “cash” to DGE

1984-2.   In 1986, petitioner and Mr. Ellison paid $20,750 in

“cash” to DGE 1984-2.

     Petitioner signed checks, on accounts held jointly by

petitioner and Mr. Ellison, made payable to Hoyt partnerships or

the Hoyt organization.   Several of these checks were for

thousands of dollars.

     Petitioner did not ask Mr. Ellison detailed questions about

the Hoyt partnerships--especially before they were contacted by

the Internal Revenue Service (IRS) about this investment and the

deductions associated with it.    Mr. Ellison’s responses to

petitioner’s questions usually were along the lines of:     “Hoyt

has it under control”, “Hoyt is dealing with it”, or “Don’t worry

about it”.

     Apart from the Hoyt partnerships, petitioner and Mr. Ellison

did not have any investments at the time they invested in the

Hoyt partnerships.

Documents From the Hoyt Organization

     Promotional materials and correspondence, including bills,

from the Hoyt organization were mailed (i.e., addressed) to



     3
        Petitioner and Mr. Ellison invested in several other Hoyt
partnerships subsequent to the years in issue.
                               - 6 -

petitioner and Mr. Ellison.   Letters and other documents provided

to petitioner and Mr. Ellison by the Hoyt organization referred

to petitioner and Mr. Ellison as partners and listed “Don & Pam

Ellison” under the heading of partner’s name.

     Petitioner and Mr. Ellison received promotional materials

from the Hoyt organization about the Hoyt partnerships.     Mr.

Ellison kept these materials in his files.    One of the

promotional materials included the following language under the

heading Specific Risks Involved:    “A change in the tax laws or an

audit and disallowance by the IRS could take away all or part of

the tax benefits, plus the possibility of having to pay the tax

along with penalties and interest”.    It further stated:

     This term [“head torn off”] is crude but, it is a
     concept that is very applicable to the comparison of
     having a disallowance of your partnership tax
     deductions by the Internal Revenue Service. The
     prospect of having to pay the taxes when you have put
     your tax money into a tax shelter, and it’s gone, is a
     financial wreck.

The brochure went on to state that there was no assurance that

things would be “O.K.”   In discussing the preparation of investor

tax returns, the promotional materials warned “there is a risk”

and stated that after many years of experience with tax shelters

the Hoyt partnerships have learned how “to deal with IRS audits

of the Partnerships’ returns and the Partners’ personal returns,

(being ‘attacked’ by the IRS)”.    The promotional materials also
                                - 7 -

advised prospective investors to get “expert tax help” concerning

the Hoyt partnerships.

     The promotional materials further stated:    “If a Partner

needs more or less Partnership loss to be special[ly] allocated

to him for any year, it is arranged quickly within the same

office, without the Partner having to pay a higher fee while an

outside preparer spends more time to make the arrangements.”

     The promotional materials clearly contemplated the tax

shelter being audited by the IRS--stating at one point:    “we know

we will be subject to constant audits by the IRS”.

     Other documents petitioner and Mr. Ellison received from the

Hoyt organization contained the following statements under the

heading “Federal Income Tax Related Risks”:

     Special tax counsel to the Partnership has not provided
     any opinion with respect to IRS recognizing the
     Partnership as a Partnership for tax purposes, the
     deductibility or treatment of any particular item, the
     proper percentages for allocating Partnership profits,
     losses, gains, deductions or credits among Partners,
     the fair market value of the purchased Registered
     Shorthorn Cattle or the amount of allowable income,
     credit, or losses that may be generated by the
     Partnership.

     NO ASSURANCE   CAN BE GIVEN THAT THE IRS WILL NOT ATTEMPT
     TO TREAT THE   PARTNERSHIP AS A TAX SHELTER, or whether
     such attempt   to treat the Partnership as a tax shelter
     would not be   successful.

     Moreover, because the Partnership has not requested a
     ruling from the IRS with respect to any of the tax
     consequences of the Partnership, there is an inherent
     and substantial risk that such benefits might be
     challenged in whole or in part by the IRS.
                               - 8 -

     Because a special Tax Counsel’s opinion concerning the
     tax status of the Partnership is not binding on the IRS
     or any court, one was not requested or obtained because
     no assurance can be given that the IRS might not
     successfully challenge the tax classification of the
     Partnership.

     IRS audits of the Partnership’s tax returns are
     certain.

     As of the date of this Memorandum, the IRS has proposed
     disallowance of certain losses and investment tax
     credits assigned to the Limited Partners of seventeen
     (17) prior Partnerships for the tax years 1977, 1978,
     1979, and 1980.

     No assurance can be given the IRS will not challenge
     [the allocations made by the Hoyt organization].

     There can be no assurance that the tax consequences
     indicated herein will be applied to the Partnership or
     to the Partners since such matters are subject to
     change by legislation, administrative action and
     judicial decision.

Tax Returns

     Petitioner and Mr. Ellison filed joint Federal income tax

returns for 1982, 1983, 1984, 1985, and 1986.   Before petitioner

and Mr. Ellison invested in the Hoyt partnerships, H & R Block

prepared their returns.   After petitioner and Mr. Ellison

invested in the Hoyt partnerships, the Hoyt organization prepared

their returns.

     On their joint income tax return for 1985, petitioner and

Mr. Ellison reported $77,649 in wages.   In arriving at total

income, the only additions and subtractions were $1,167 in

interest income, $442 in taxable refunds of State and local

taxes, and a $128,407 Schedule E, Supplemental Income Schedule,
                                 - 9 -

loss.   This Schedule E loss was entirely attributable to

petitioner and Mr. Ellison’s investment in the Hoyt partnerships.

The total tax listed was zero.    The Federal income tax withheld

listed was $16,872.   The Tax Office of W.J. Hoyt Sons Management

Co. was listed as the return preparer on the 1985 return.

     Mr. Ellison reviewed his joint return for 1985.   He noted

that the deduction related to the Hoyt partnerships was large

compared with his income.   Petitioner did not review her joint

returns for 1985 or 1986.

     On their joint income tax return for 1986, petitioner and

Mr. Ellison reported $33,274 in wages.   In arriving at total

income, the only additions and subtractions were $1,689 in

interest income, $74 in taxable refunds of State and local taxes,

a $20 other loss (related to the sale or exchange of a trailer),

$2,973 in taxable unemployment compensation, and a $14,598

Schedule E loss.   Most of the Schedule E loss was attributable to

petitioner and Mr. Ellison’s investment in the Hoyt partnerships.

The total tax listed was zero.    The Federal income tax withheld

listed was $7,932.    The Tax Office of W.J. Hoyt Sons Management

Co. was listed as the return preparer on the 1986 return.

     The Schedules K-1, Partner’s Share of Income, Credits,

Deductions, etc., issued by the Hoyt partnerships to petitioner
                               - 10 -

and Mr. Ellison for 1985 and 1986 list the following under the

area for partner’s name:    “Don & Pamela Ellison”.4

     In 1986, petitioner and Mr. Ellison applied for a refund of

their 1982, 1983, and 1984 taxes in the amounts of $1,629, $833,

and $2,097, respectively.

     On June 16, 1998, respondent mailed petitioner and Mr.

Ellison two letters and reports explaining computational

adjustments made to their 1982, 1983, 1984, 1985, and 1986

returns as a result of adjustments made to the partnership

returns of DGE 1984-2 for 1985 and 1986.    These computational

adjustments resulted from the Court’s opinion in Shorthorn

Genetic Engg. 1982-2, Ltd. v. Commissioner, T.C. Memo. 1996-515.

Request for Relief From Joint and Several Liability

     On or about July 17, 2000, petitioner mailed respondent a

Form 8857, Request for Innocent Spouse Relief (and Separation of

Liability and Equitable Relief).5   Betty Sneed and Bonnie Halbert

were assigned to review petitioner’s request for section 6015

relief.



     4
        This is also true for the years subsequent to the years
in issue (1987 through 1995).
     5
        Petitioner requested relief for the tax years 1982
through 1997. On Nov. 14, 2000, respondent mailed petitioner a
letter advising her that the request was premature for the years
1987 through 1997 as the request related to a potential
assessment from a TEFRA (Tax Equity and Fiscal Responsibility Act
of 1982, Pub. L. 97-248, 96 Stat. 324) partnership proceeding
that, as of that date, had not been concluded.
                                - 11 -

     In processing petitioner’s claim, the agent assigned to

petitioner’s case requested Hoyt partnerships related information

regarding petitioner and Mr. Ellison from Revenue Agent Deborah

Ritchie.6    Ms. Ritchie provided the employees reviewing

petitioner’s claim with a computer printout for Hoyt partnerships

taxable years related to petitioner and Mr. Ellison, copies of

Schedules K-1 issued to petitioner and Mr. Ellison from the Hoyt

partnerships, copies of checks signed by petitioner or Mr.

Ellison made payable to Hoyt partnerships, and Hoyt partnerships

documents signed by petitioner and Mr. Ellison.

     On November 6, 2000, respondent mailed Mr. Ellison a letter

notifying him of petitioner’s request for relief from joint and

several liability.

     On August 9, 2001, Ms. Halbert prepared a written evaluation

of petitioner’s claim.    Ms. Halbert concluded that petitioner was

not entitled to section 6015(b) relief because petitioner knew of

the Hoyt partnerships and owned the item that gave rise to the

deficiency (i.e., the Hoyt partnerships).    Ms. Halbert concluded

that no factor favored granting section 6015(f) relief and the

following factors weighed against granting section 6015(f)

relief:     (1) Lack of economic hardship, (2) the liability was not



     6
        Ms. Ritchie worked on the “Hoyt audit team” and the “Hoyt
tax shelter project”. The Hoyt tax shelter project examined Hoyt
partnerships. Ms. Ritchie assisted District Counsel in preparing
Hoyt partnerships cases for trial.
                               - 12 -

solely attributable to the nonrequesting spouse, and (3) the

requesting spouse had knowledge or reason to know.    Accordingly,

Ms. Halbert concluded it was not inequitable to hold petitioner

liable.

     On August 21, 2001, respondent mailed petitioner a

preliminary determination with respect to petitioner’s request

for relief from joint and several liability for 1982 through

1986.    Respondent determined that petitioner was not entitled to

relief pursuant to section 6015(b), (c), or (f).

     On September 14, 2001, petitioner mailed respondent, among

other things, a statement of disagreement with respondent’s

preliminary determination.

     Appeals Officer Bonnie Boak was assigned to review

petitioner’s case.    Ms. Boak had no prior involvement with Hoyt

partnerships cases.

     On January 9, 2002, Ms. Boak mailed petitioner’s counsel a

letter that proposed arranging an Appeals conference.     That same

date, Ms. Boak mailed Mr. Ellison’s counsel (who also is

petitioner’s counsel) a letter to notify Mr. Ellison of

petitioner’s request for relief from joint and several liability

and offering Mr. Ellison the opportunity to submit any additional

information or to meet with Ms. Boak regarding petitioner’s

claim.
                               - 13 -

     On February 14, 2002, petitioner’s counsel mailed a letter

to Ms. Boak that supplemented the facts and legal arguments for

her consideration.

     Ms. Boak provided petitioner with the opportunity to submit

any additional information for Ms. Boak to consider before

completing her review of petitioner’s case.    Ms. Boak reviewed

and considered everything submitted to her by petitioner and her

attorneys.    Ms. Boak spent approximately 10 to 20 hours on the

phone with petitioner’s attorneys discussing petitioner’s case.

     On April 2, 2002, Ms. Boak wrote petitioner’s counsel a

5-page letter advising her (petitioner’s counsel) that she agreed

with the service center’s decision to deny section 6015 relief

and provided a detailed explanation supporting her conclusions

and responding to petitioner’s counsel’s legal arguments.

     On or about April 8, 2002, after completing her review of

petitioner’s case (which included all materials contained in

respondent’s file and provided by petitioner and her counsel),

Ms. Boak prepared an Appeals Case Memorandum.    Ms. Boak concluded

that petitioner was not entitled to relief from liability

pursuant to section 6015(b), (c), or (f) for 1982 through 1986.

Team Manager Leonard Bartold approved Ms. Boak’s Appeals Case

Memorandum.

     On April 17, 2002, respondent mailed petitioner a notice of

determination that determined petitioner was not entitled to
                                - 14 -

relief from liability pursuant to section 6015(b), (c), or (f)

for 1982 through 1986 (notice of determination).    The notice of

determination listed the following amounts of tax7 outstanding:

$5,454 for 1982, $2,593 for 1983, $7,207 for 1984, $56,081 for

1985, and $1,745 for 1986.

Petitioner’s Financial Status

     On February 28, 2003, petitioner and Mr. Ellison signed a

Form 433-A, Collection Information Statement for Wage Earners and

Self-Employed Individuals.    The Form 433-A contained the

following statements:    Petitioner and Mr. Ellison owned the home

that they purchased in June 1989 for $97,000, with a current

value of $150,000, a loan balance of $123,463, and a monthly

payment totaling $1,015; they had no dependents they could claim

on their tax return; they had two checking accounts and one

savings account at Monroe Bank & Trust with a total balance of

$4,398.    Their investments (Form 433-A investments) included:

(1) Monroe Bank & Trust (401k) with a current value of $30,362;

(2) Fidelity-IISI, Inc. (401k) with a current value of $17,329;

(3) Fidelity-Ford Tesphe (401k) with a current value of $44,917;

(4) Fidelity Investments (IRA-Pam) with a current value of

$2,526; and (5) 266 shares of Monroe Bank & Trust with a current

value of $2,979.    They had available credit of $15,420 from Key

Bank and they had life insurance with a current cash value of


     7
          These amounts included interest.
                              - 15 -

$3,554 (after subtracting for outstanding loans).   They also

owned two cars (a 2001 Ford Windstar and a 1990 Honda Civic)

worth a total of $12,790 (with no outstanding loans on the

vehicles); a 1998 Sea-Doo GTi 3-Pass, a 1997 Sea-Doo GTi 3

3-Pass, and a Kawasaki VN 1500-D2 Vulcan Clsc worth a total of

$9,160 (with no outstanding loans on the vehicles); they were

leasing a 2002 Ford Ranger; and they had no personal assets

(i.e., zero).

     In determining the current value of their Form 433-A

investments, petitioner and Mr. Ellison valued them at 60 percent

of the face value even though the Form 433-A states:   “Current

Value:   Indicate the amount you could sell the asset for today.”

In determining the current value of their real estate, petitioner

and Mr. Ellison valued their home at “80 percent quick sale

value” even though the Form 433-A states:   “Current Value:

Indicate the amount you could sell the asset for today.”

     Under the monthly income and expense analysis on Form 433-A,

petitioner and Mr. Ellison listed monthly wages of $4,688 for Mr.

Ellison, monthly wages of $1,977 for petitioner, and monthly

interest/dividends of $33 for total monthly income of $6,698.

Under total living expenses, petitioner and Mr. Ellison listed

$1,290 for food, clothing, and miscellaneous; $1,583 for housing

and utilities; $617 for transportation; $1,452 for taxes; $210
                             - 16 -

for other secured debt (lease payments);8 and $412 for other

expenses consisting of attorney’s fees.   This brought their total

expenses to $5,5649 per month.

     Attached to the Form 433-A were the following:   A uniform

residential appraisal report for petitioner and Mr. Ellison’s

home with an estimate of fair market value, as of June 29, 1999,

of $150,000; Monroe Bank & Trust statements for petitioner and

Mr. Ellison (1) dated January 17, 2003, which listed their

average balance of $776.30, a beginning balance of $1,060, and an

ending balance of $404.42 in their “regular personal account”,

(2) dated January 23, 2003, which listed a beginning balance of

$5,728.73 and an ending balance of $4,890.64 in their “Personal

M.M.P.” account, and (3) dated January 23, 2003, listing a

balance of $137.50 in their “savings” account; a Monroe Bank &

Trust Employee Savings Trust statement with a current and vested

balance as of February 13, 2003, totaling $54,924.97; a Fidelity

account statement listing a closing and vested balance as of

February 14, 2003, totaling $28,880.89; a Fidelity account

statement listing a closing and vested balance as of January 23,

2003, totaling $102,892.44 ($73,355.46 in Ford Tesphe and

$29,536.98 in IISI, Inc.); a Form 5498, IRA Contribution


     8
        The Form 433-A, however, states that transportation
expense includes lease payments.
     9
        On the Form 433-A, petitioner and Mr. Ellison listed this
total as $5,659.
                                - 17 -

Information, for 2002 from Fidelity Investments issued to

petitioner with a fair market value of $4,183.39 as of December

31, 2002; and their 2001 joint tax return which listed adjusted

gross income of $92,840.

                                OPINION

I.    Evidentiary Issue

      As a preliminary matter, we must decide whether a document

petitioner submitted during the trial of this case should be

admitted into evidence.     At trial, petitioner sought to introduce

a “fraud referral” memorandum for Walter J. Hoyt III (Exhibit 86-

P).   Respondent objected to the admission of Exhibit 86-P on the

grounds of authentication, relevance, and hearsay.    We reserved

ruling on Exhibit 86-P’s admissibility.

      Petitioner failed to make any arguments regarding the

admissibility of Exhibit 86-P in her opening brief.    In her reply

brief, petitioner stated:    “Petitioner has addressed the

relevance and purpose of Exhibit 86-P in her opening brief, in

the context of proposed findings of fact.”

      For the reasons stated in Doyel v. Commissioner, T.C. Memo.

2004-35 (abandonment, hearsay, lack of authenticity, relevancy,

and wastefulness), we do not admit Exhibit 86-P into evidence.

II.   Section 6015 Relief

      In general, spouses filing joint Federal income tax returns

are jointly and severally liable for all taxes due.    Sec.
                                - 18 -

6013(d)(3).    Under certain circumstances, however, section 6015

provides relief from this general rule.     Except as otherwise

provided in section 6015, petitioner bears the burden of proof.

Rule 142(a); Jonson v. Commissioner, 118 T.C. 106, 113 (2002),

affd. 353 F.3d 1181 (10th Cir. 2003).

     In arguing that petitioner is entitled to relief pursuant to

section 6015, petitioner relies upon the regulations related to

section 6015.     Sections 1.6015-0 through 1.6015-9, Income Tax

Regs., are applicable for elections or requests for relief filed

on or after July 18, 2002.     Sec. 1.6015-9, Income Tax Regs.

Petitioner filed her election prior to this date; accordingly,

the regulations are inapplicable.

     Petitioner also cites chief counsel advice and Tax Court

summary opinions to support her claims.     Parties are statutorily

proscribed from citing chief counsel advice as precedent.     Sec.

6110(k)(3); see Willamette Indus., Inc. v. Commissioner, 118 T.C.

126, 134 n.10 (2002).     By statute, summary opinions shall not be

treated as precedent.     Sec. 7463(b).

     A.      Relief Under Section 6015(b)

     To qualify for relief from joint and several liability under

section 6015(b)(1), a taxpayer must establish:

             (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;
                               - 19 -

          (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 * * *.

     The requirements of section 6015(b)(1) are stated in the

conjunctive.    Accordingly, a failure to meet any one of them is

sufficient for us to find that petitioner does not qualify for

relief pursuant to section 6015(b).     Alt v. Commissioner, 119

T.C. 306, 313 (2002).

     Respondent contends that petitioner failed to establish the

requirements of subparagraphs (B), (C), and (D).    We need not

decide whether petitioner satisfies the requirements of

subparagraphs (C) and (D) because we find that the

understatements of tax on the returns in issue are not

attributable to the erroneous items of 1 individual filing the

joint return.

     Petitioner admits that the Hoyt partnerships caused the

erroneous items on the returns.    Petitioner, however, contends

that the Hoyt partnerships are not attributable to her.
                                - 20 -

     Petitioner was a partner in the Hoyt partnerships.      She

signed documents relating to her and Mr. Ellison’s investment in

the Hoyt partnerships.   See Hayman v. Commissioner, 992 F.2d

1256, 1260-1261 (2d Cir. 1993), affg. T.C. Memo. 1992-228.

Although petitioner may have signed the checks to the Hoyt

organization because Mr. Ellison asked her, the checks made

payable to Hoyt partnerships were drawn on petitioner and Mr.

Ellison’s joint bank account.

     Furthermore, it is clear that the Hoyt organization treated

her, and Mr. Ellison, as a partner in the Hoyt partnerships.       The

Schedules K-1 the Hoyt organization issued regarding their

investment in DGE 1984-2 listed petitioner and Mr. Ellison as

partners in this Hoyt partnership.       Additionally, numerous other

documents refer to her as a partner in the Hoyt partnerships.

     Finally, Mr. Ellison may have taken the initiative and

played a more dominant role in deciding to invest in the Hoyt

partnerships, but petitioner agreed to invest in the Hoyt

partnerships, and she did it jointly with Mr. Ellison.

Petitioner considered the Hoyt partnerships to be her and Mr.

Ellison’s investment.    Additionally, petitioner admitted, in her

petition, to being a partner in DGE 1984-2 in 1985 and 1996.

     Accordingly, we conclude that the understatements are not

attributable to the erroneous items of one individual filing the

joint returns.   See Doyel v. Commissioner, T.C. Memo. 2004-35
                                - 21 -

(investment in Hoyt partnership was attributable to the taxpayer

requesting section 6015 relief because she was a partner in the

Hoyt partnership).     Accordingly, we conclude that petitioner is

not entitled to relief pursuant to section 6015(b).

     B.   Relief Under Section 6015(f)

     Respondent argues that he did not abuse his discretion in

denying petitioner equitable relief under section 6015(f).

Respondent’s denial of relief is reviewed under an abuse of

discretion standard.     Cheshire v. Commissioner, 115 T.C. 183, 198

(2000), affd. 282 F.3d 326 (5th Cir. 2002); Butler v.

Commissioner, 114 T.C. 276, 292 (2000).    Our review is not

limited to respondent’s administrative record.     Ewing v.

Commissioner, 122 T.C. ___ (2004).

     As directed by section 6015(f), the Commissioner prescribed

procedures in Rev. Proc. 2000-15, 2000-1 C.B. 447,10 that

respondent uses to determine whether an individual qualifies for

relief under section 6015(f).

     In this case, none of the six factors in Rev. Proc. 2000-15,

2000-1 C.B. 447, weighing in favor of granting relief are




     10
        We note that Rev. Proc. 2003-61, 2003-32 I.R.B. 296
(Aug. 11, 2003), superseded Rev. Proc. 2000-15, 2000-1 C.B. 447.
Rev. Proc. 2003-61, sec. 6, 2003-32 I.R.B. at 299. The new
revenue procedure, however, is effective for requests for relief
filed on or after Nov. 1, 2003. Id. Accordingly, it is
inapplicable to the case at bar.
                               - 22 -

present:11   (1) Petitioner was not separated or divorced from Mr.

Ellison, (2) petitioner will not suffer economic hardship if

relief is denied, (3) petitioner was not abused by Mr. Ellison,

(4) petitioner knew or had reason to know of the item giving rise

to the deficiency, (5) Mr. Ellison did not have an obligation to

pay the liability pursuant to a divorce decree, and (6) the items

giving rise to the deficiencies are not attributable solely to

Mr. Ellison.   See Washington v. Commissioner, 120 T.C. 137, 147

(2003).   Additionally, the following factors weighing against

relief are present:12   (1) The items giving rise to the

deficiencies are attributable to petitioner, (2) petitioner knew




     11
        We note that in her Appeals memorandum, Ms. Boak
considered the fact that petitioner and Mr. Ellison were still
married and living together, there was no abuse, and that there
was no legal obligation of the nonrequesting spouse to pay the
liability to be factors weighing against sec. 6015(f) relief.
This was incorrect--she should have treated them as neutral.
Washington v. Commissioner, 120 T.C. 137, 149 (2003). Ms.
Halbert, who initially reviewed the case, however, did not
consider the absence of these factors to weigh against granting
equitable relief.

     It is unclear whether the notice of determination is based
on Ms. Halbert’s or Ms. Boak’s analysis. Regardless, neither
found any factors weighing in favor of relief to be present and
both found factors that properly weighed against relief to be
present. Accordingly, Ms. Boak’s mistake is not a basis for
finding that respondent abused his discretion.
     12
        The absence of certain factors weighing against
equitable relief does not weigh in favor of granting relief--they
are neutral. Doyel v. Commissioner, T.C. Memo. 2004-35; see
Washington v. Commissioner, supra at 149.
                                - 23 -

or had reason to know of the item giving rise to the deficiency,

and (3) petitioner will not suffer economic hardship.     Id.

       Petitioner claims:   She did not want to stay in the Hoyt

partnerships, but Mr. Ellison did; Mr. Ellison played the

dominant role in handling the financial affairs of their family;

and she did not have a choice not to sign the Hoyt documents or

her tax returns and that she had to do what Mr. Ellison wanted.

       Petitioner left the final decision to invest in the Hoyt

partnerships to Mr. Ellison--essentially, petitioner acquiesced

or agreed to go along with Mr. Ellison’s wishes.     Additionally,

petitioner and Mr. Ellison testified that Mr. Ellison did not

threaten or abuse petitioner and that he did not force petitioner

to invest in the Hoyt partnerships.

       Petitioner also notes that Mr. Ellison opened all the mail

from the Hoyt organization and the IRS.

       Mr. Ellison testified that he talked to petitioner about the

mail but that she was not interested.     Mr. Ellison also testified

that petitioner could have understood the mail if she had read

it.    Petitioner testified that she occasionally read documents

from the Hoyt organization or the IRS if Mr. Ellison left them

out.    Petitioner also testified that she could have looked at the

mail and Mr. Ellison’s files regarding the Hoyt partnerships if

she had wanted.
                                - 24 -

     Mr. Ellison did not hide, or try to hide, any mail from

petitioner.   Furthermore, knowledge or reason to know for

purposes of section 6015(f) is defined by Rev. Proc. 2000-15,

2000-1 C.B. 447, as knowledge or reason to know “of the item

giving rise to a deficiency.”     Petitioner knew about the Hoyt

partnerships.

     Petitioner claims that Mr. Hoyt’s deceit is relevant to the

determination whether petitioner is entitled to relief under

section 6015(f).    Ms. Boak considered the fact that both

petitioner and Mr. Ellison were deceived by Mr. Hoyt.       Even if

Mr. Hoyt’s deceit is relevant, it does not lead to the result

petitioner desires.

     A purpose of section 6015 is to protect one spouse from the

overreaching or dishonesty of the other.     See Purcell v.

Commissioner, 826 F.2d 470, 475 (6th Cir. 1987), affg. 86 T.C.

228 (1986).     The understatement in tax in this case is

attributable to a mistaken belief on the part of both petitioner

and Mr. Ellison as to the legitimacy of the tax shelter

deductions.     Under these circumstances, we perceive no inequity

in holding both spouses to joint and several liability.       Bokum v.

Commissioner, 94 T.C. 126, 146 (1990), affd. 992 F.2d 1132 (11th

Cir. 1993); McCoy v. Commissioner, 57 T.C. 732, 735 (1972).

     Petitioner claims that respondent disregarded petitioner’s

expenses and looked at adjusted gross income to determine
                              - 25 -

economic hardship.   Even if this were true, the evidence supports

respondent’s conclusion that petitioner will not suffer economic

hardship if section 6015 relief is not granted.

     First, contrary to petitioner’s assertion on brief that she

may have a limited number of years left to work due to her

health, petitioner testified even though she had a heart attack a

few years ago that as of the time of trial she was in good

health.   Second, even if we included petitioner’s tax liabilities

for years not in issue to reach a total tax liability estimated

by petitioner to be $155,000, petitioner has sufficient financial

ability to pay this amount.

     As of February 2003, based on the information she provided,

the assets listed on the Form 433-A had a total current fair

market value of approximately $260,000.13   Additionally, after

allowing petitioner expenses of $5,56414 listed on the Form 433-


     13
        In reaching this figure, we used the following figures:
$4,398 for the checking and savings account, $166,235 for the
Form 433-A investments (the actual value of the 401(k)s
($54,924.97 plus $28,880.89 plus $73,355.46), the IRA
($4,183.39), the Personal M.M.P. account ($4,890.64)), $3,554 for
the cash value of the life insurance, $12,790 for the cars,
$9,160 for the other vehicles, and $64,037 for the equity in
their home (based on a fair market value of $187,500 (the
$150,000 listed 80 percent value adjusted to 100 percent--i.e.,
$150,000 divided by 80 percent) minus the outstanding debt of
$123,463). This figure does not include the $15,000 of credit
petitioner listed as available on the Form 433-A.
     14
        The Form 433-A states that transportation expense
includes lease payments. Petitioner and Mr. Ellison listed under
“other secured debt” the lease payment for their 2002 Ford
                                                   (continued...)
                              - 26 -

A--a figure merely provided on the Form 433-A and not

substantiated by any underlying evidence--petitioner had $1,134

per month (approximately $13,600 per year) available to pay

towards the outstanding tax liability.

     Petitioner did not present evidence that demonstrated that

petitioner will be unable to pay her reasonable basic living

expenses if relief is not granted.     Sec. 301.6343-1(b)(4),

Proced. & Admin. Regs.   Accordingly, we conclude that respondent

was correct, and did not abuse his discretion, in determining

that petitioner would not suffer economic hardship.

     Although not a specific factor listed in the revenue

procedure, in considering all the facts and circumstances it is

worth noting that petitioner was skeptical about the supposed tax

benefits provided by the Hoyt partnerships and did not think it

would work.

     Petitioner also argues that respondent made blanket “pro

forma” denials of Hoyt investor section 6015 claims.     We

disagree.   Respondent’s agents assigned to review petitioner’s

claim conducted a full, impartial, and fair evaluation of

petitioner’s section 6015 claim.   They reached their conclusions



     14
      (...continued)
Ranger. Petitioner did not provide evidence regarding     how the
amount of the transportation expense on the Form 433-A    was
calculated. Accordingly, in determining the amount of     monthly
expenses, petitioner may have double counted the lease    payment
for the 2002 Ford Ranger.
                             - 27 -

on the basis of the facts and circumstances present in this case.

See also Doyel v. Commissioner, T.C. Memo. 2004-35, in which we

further explained the flaws in arguments on this issue.

     On the basis of all the facts and circumstances, we conclude

that respondent did not abuse his discretion in denying

petitioner relief pursuant to section 6015(f).

     In reaching our holdings, we have considered all arguments

made by the parties, and, to the extent not mentioned above, we

conclude they are irrelevant or without merit.

     To reflect the foregoing,

                                        Decision will be entered

                                   for respondent.
