                  T.C. Summary Opinion 2005-48



                     UNITED STATES TAX COURT



VERNON STACY TAYLOR, Petitioner, AND SHERRI D. TAYLOR, Intervenor
                                v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 2337-04S.              Filed April 19, 2005.


     Vernon Stacy Taylor, pro se.

     Sherri D. Taylor, pro se.

     Adam L. Flick, for respondent.



     DEAN, Special Trial Judge:     This case was heard pursuant to

the provisions of section 7463 of the Internal Revenue Code in

effect at the time the petition was filed.    Unless otherwise

indicated, all subsequent section references are to the Internal

Revenue Code in effect for the year at issue, and all Rule

references are to the Tax Court Rules of Practice and Procedure.
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The decision to be entered is not reviewable by any other court,

and this opinion should not be cited as authority.

     The case arises from petitioner’s election to seek relief

from joint and several liability for Federal income tax for

petitioner’s 2001 taxable year under section 6015(f).      Respondent

determined that petitioner is not entitled to relief.

     The issue for decision is whether respondent’s determination

that petitioner is not entitled to relief under section 6015(f)

is an abuse of discretion.

                             Background

     Some of the facts are stipulated.      The stipulated facts and

the exhibits received into evidence are incorporated herein by

reference.   At the time the petition in this case was filed,

petitioner resided in Grapevine, Texas.

     During 2001, petitioner was married to Sherri D. Taylor

(intervenor).   Petitioner, an accountant, has a college degree

and owned the S corporation by which he was employed, Archive

Litigation Services, Inc. (Archive).      Intervenor has a high

school diploma and was employed as a business manager for which

she reported wages of $73,352.40.

     Intervenor was also a part owner of three “passthrough”

entities, Armstrong Archives, LLC (Armstrong), Property Leasing

X, LLP (Property), and United Business Services.      Intervenor

reported net income from Armstrong and Property for 2001 and
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petitioner, although he received wages of $26,850, reported from

Archive a net loss of $14,840.    The return also reported net

rental income of $2,852 and small amounts of interest and

dividends.

     Petitioner and intervenor reported their income yearly on

jointly filed Federal income tax returns beginning in 1984, the

year of their marriage.    In 1999, wage withholdings were

sufficient to pay the joint tax liability; intervenor’s business

interests lost money while petitioner’s business was profitable.

     For several months leading to the departure of intervenor

from the marital household on June 15, 2001, the marriage had

been strained and tense.    Despite the “unfriendly” separation,

petitioner volunteered to intervenor to prepare a joint income

tax return for 2001, as he had done over the course of their

marriage.    Intervenor provided petitioner with the information

concerning her tax matters for 2001.

     Petitioner signed the return on April 11, 2002, and

presented it to intervenor for her signature.    On the advice of

her attorney, intervenor refused to sign the return.    Petitioner

filed the return without intervenor’s signature and without

remittance.    Intervenor has, however, ratified the filing of the

return on her behalf, but the tax remains unpaid.

     Petitioner and intervenor’s divorce is pending in a Texas

family court.
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                             Discussion

     Generally, married taxpayers may elect to file a joint

Federal income tax return.   Sec. 6013(a).   After making the

election, each spouse is jointly and severally liable for the

entire tax due.   Sec. 6013(d)(3).   A spouse, however, may seek

relief from joint and several liability under section 6015.     To

obtain relief from liability, a spouse must qualify under section

6015(b), or if eligible, may allocate liability under section

6015(c).   In addition, if relief is not available under section

6015(b) or (c),1 a spouse may seek equitable relief under section

6015(f).   Fernandez v. Commissioner, 114 T.C. 324, 329-331

(2000); Butler v. Commissioner, 114 T.C. 276, 287-292 (2000).

The Court's review of determinations under section 6015(f) is not

limited to the Commissioner's administrative record.    Ewing v.

Commissioner, 122 T.C. 32, 44 (2004).

     Except as otherwise provided in section 6015, the taxpayer

bears the burden of proof.   Rule 142(a); Alt v. Commissioner, 119

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

     Section 6015(f) grants the Commissioner discretion to

relieve from joint and several liability an individual who files

a joint return.   Because relief from the 2001 underpayment is not


     1
      Because petitioner seeks relief from an underpayment of tax
rather than an understatement, relief under subsections (b) and
(c) of sec. 6015 is not available. Sec. 6015(b) and (c); see
also Washington v. Commissioner, 120 T.C. 137, 145-147 (2003).
                               - 5 -

available to petitioner under section 6015(b) or (c), he has

satisfied one of the two prerequisites for relief under section

6015(f).

     The other prerequisite is that it is inequitable to hold the

individual liable for the unpaid tax, taking into consideration

all of the facts and circumstances.    As contemplated by section

6015(f), the Commissioner has prescribed guidelines in Rev. Proc.

2000-15, sec. 4.02, 2000-1 C.B. 447, 448, to be used in

determining whether an individual qualifies for relief under that

section.2   Rev. Proc. 2000-15, sec. 4.01, 2000-1 C.B. at 448,

sets forth the threshold conditions that must be satisfied before

the Commissioner will consider a request for equitable relief

under section 6015(f).   Respondent does not dispute that

petitioner has satisfied the threshold conditions.

     Where the requesting spouse satisfies the threshold

conditions set forth in Rev. Proc. 2000-15, sec. 4.01, sec. 4.02

sets forth the circumstances under which the Commissioner will

ordinarily grant relief to that spouse under section 6015(f).

     Respondent determined that petitioner has not shown that, at

the time the return was signed, he had no knowledge or reason to


     2
      The guidelines applicable herein are set forth in Rev.
Proc. 2000-15, 2000-1 C.B. 447, which was in effect at the time
petitioner’s request for relief was made, Aug. 12, 2002. Rev.
Proc. 2000-15, supra, has been superseded by Rev. Proc. 2003-61,
2003-32 I.R.B. 296, effective for requests for relief filed on or
after Nov. 1, 2003.
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know that the tax would not be paid.    Respondent also determined

that he has failed to show that he would suffer economic hardship

if relief is not granted.   Respondent therefore concluded that

petitioner has failed to satisfy all of the elements of Rev.

Proc. 2000-15, sec. 4.02 and does not qualify for relief under

section 6015(f).

     Petitioner testified at trial that he signed and presented

the return to the intervenor, and “she wouldn’t sign it and pay

the tax”.   He argues that “when I signed it and presented it, I

expected that it would be paid”.   Petitioner testified that in

2000 intervenor received “passthrough” entity income and had paid

the tax and he expected that it would be paid for 2001.

     Intervenor testified that when she moved out of the marital

home in June of 2001, she took with her no marital assets.

According to intervenor’s testimony, when she left the house,

petitioner removed all their financial assets from joint accounts

and a safe deposit box.   All of the marital assets were placed

under petitioner’s control, intervenor testified.

     The Court concludes that petitioner knew at the time he

signed the return that he intended to demand that intervenor pay

the entire amount of tax due.   Petitioner certainly knew that his

marriage had failed and that there was acrimony between him and

his wife.   Whether or not petitioner had assumed control of all

the financial assets of the marriage, he had ample reason to
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expect that intervenor, having retained counsel for divorce,

would balk at paying the entire tax liability.    Judging from

petitioner’s actions, he had evidently decided that he would not

be the one to pay the tax liability.    The Court finds from the

record that petitioner has not shown that at the time he signed

the return he had no reason to know that the tax would not be

paid.

     In determining whether a requesting spouse will suffer

economic hardship if relief is not granted, Rev. Proc. 2000-15,

supra, looks to section 301.6343-1(b)(4), Proced. & Admin. Regs.,

for guidance.    Rev. Proc. 2000-15, sec. 4.02(1)(c).   Economic

hardship is present if satisfaction of the tax liability in whole

or in part will cause the taxpayer to be unable to pay

reasonable basic living expenses.    Sec. 301.6343-1(b)(4), Proced.

& Admin. Regs.    Petitioner offered no evidence that payment of

part or all of the tax due would cause him financial hardship.

     Where, as here, the requesting spouse fails to qualify for

relief under Rev. Proc. 2000-15, sec. 4.02, the Commissioner may

nonetheless grant the requesting spouse relief under Rev. Proc.

2000-15, sec. 4.03, 2000-1 C.B. at 448.    Rev. Proc. 2000-15, sec.

4.03(1) and (2), 2000-1 C.B. at 448-449, sets forth six positive

and six negative factors that are to be considered in determining

whether to grant relief.    The revenue procedure makes clear that

no single factor is to be determinative in any particular case,
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that all factors are to be considered and weighed appropriately,

and that the list of factors is not intended to be exhaustive.

      The knowledge or reason to know factor, the economic

hardship factor, and the legal obligation to pay factor in Rev.

Proc. 2000-15, sec. 4.03(2)(b), (d), and (f), 2000-1 C.B. at 449,

respectively, are the opposites of the knowledge or reason to

know factor, the economic hardship factor, and the legal

obligation to pay factor in Rev. Proc. 2000-15, sec. 4.03(1)(d),

(b), and (e), respectively.   The attribution factor in Rev. Proc.

2000-15, sec. 4.03(2)(a) is substantially the opposite of the

attribution factor in Rev. Proc. 2000-15, sec. 4.03(1)(f).

Consequently, in the Court’s review of the Commissioner's

determination denying relief under section 6015(f), the Court has

held that a finding with respect to the reason to know, economic

hardship, legal obligation, and attribution factors ordinarily

will weigh either in favor of or against granting equitable

relief under section 6015(f).    Ewing v. Commissioner, 122 T.C. at

45.   The Court has also held that a finding that a requesting

spouse did not receive a significant benefit from the item giving

rise to the deficiency weighs in favor of granting relief under

section 6015(f).   Id.   Finally, the Court treats evidence that

the remaining positive and negative factors are not applicable as

evidence weighing neither in favor of nor against granting
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equitable relief (i.e., as neutral).      Id.

     In favor of petitioner here are the factors of marital

status, attribution, and significant benefit.     Petitioner’s

failure to show that he had no reason to know that the tax would

not be paid or that payment of part or all of the tax would cause

him economic hardship are negative factors.     Under Rev. Proc.

2000-15, sec. 4.03(2)(b), reason to know that the tax would not

be paid “is an extremely strong factor weighing against relief.”

The revenue procedure provision provides that “when the factors

in favor of equitable relief are unusually strong, it may be

appropriate to grant relief under section 6015(f) in limited

situations” where the spouse requesting relief had reason to know

of the understatement.   The Court finds no “unusually strong”

factors in favor of equitable relief here.

     Although petitioner has three factors in his favor and only

two that weigh against him, in view of the language of Rev. Proc.

2000-15, sec. 4.03(2)(b), the Court finds, considering all the

facts and circumstances, that respondent did not abuse his

discretion in denying petitioner equitable relief from joint and

severable liability under section 6015(f).

     Reviewed and adopted as the report of the Small Tax Case

Division.


                                       Decision will be entered for

                               respondent.
