                        T.C. Memo. 2011-280



                      UNITED STATES TAX COURT



                KAMAL A. HIRAMANEK, Petitioner, AND
                   ADIL HIRAMANEK, Intervenor v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 14912-10.             Filed November 28, 2011.



     Steven L. Walker, for petitioner.

     Adil Hiramanek, pro se.

     Audra M. Dineen, for respondent.



              MEMORANDUM FINDINGS OF FACT AND OPINION


     HAINES, Judge:   Respondent determined a deficiency in

petitioner and intervenor’s Federal income tax of $27,222 and an

accuracy-related penalty of $5,444 for taxable year 2006 (year at

issue).   In response to the notice of deficiency, petitioner

timely filed with this Court a petition for determination of
                               - 2 -

relief from joint and several liability on a joint return.    The

issues for decision after concessions1 are:   (1) Whether

petitioner signed the 2006 joint Federal income tax return under

duress and therefore is not jointly and severally liable for the

2006 deficiency under section 6013;2 (2) whether petitioner is

entitled to relief under section 66(c) and therefore is not

subject to the general rule that community property is taxable

one-half to each spouse; and (3) whether petitioner is an

innocent spouse entitled to relief under section 6015.

                         FINDINGS OF FACT

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

The stipulation of facts is incorporated herein by this

reference.   At the time petitioner filed her petition, she

resided in California.   At the time intervenor filed his notice

of intervention, he resided in California.

     Petitioner and intervenor were married on October 14, 1998.

They legally separated in March 2009, and on March 10, 2011, the


     1
      On Apr. 22, 2010, respondent revised the adjustments in the
notice of deficiency and mailed petitioner and intervenor a
revised examination report including Form 4549, Income Tax
Examination Changes, and Form 866-A, Explanation of Items.
Respondent determined a deficiency in petitioner and intervenor’s
Federal income tax of $26,405 and an accuracy-related penalty of
$5,281 for taxable year 2006.
     2
      Unless otherwise indicated, all section references are to
the Internal Revenue Code, as amended and in effect at all
relevant times, and all Rule references are to the Tax Court
Rules of Practice and Procedure. Amounts are rounded to the
nearest dollar.
                                 - 3 -

Superior Court of California, Santa Clara County, officially

dissolved their marriage effective December 6, 2010.

     Intervenor obtained a master’s in business administration

from the University of Washington and is a certified public

accountant.   During 2006 intervenor worked as a director of

finance for Fairchild Semiconductor International, Inc., and

Spansion, Inc.   Petitioner obtained a bachelor of commerce degree

and during her marriage to intervenor worked as a preschool

teacher for Challenger School.    Petitioner and intervenor had

three children during their marriage.

     Throughout their marriage intervenor physically and verbally

abused petitioner.   During 2007 the abuse included threats

against petitioner’s life, physical assaults, and verbal abuse.

Petitioner documented several instances of abuse in a handwritten

diary from December 13, 2005, to April 4, 2007.

     In 2007 intervenor prepared a 2006 joint Federal income tax

return (joint return) for himself and petitioner.     On the evening

of April 3, 2007, intervenor presented petitioner with a copy of

the joint return for her signature.      Petitioner refused to sign

the return without first reviewing it.     Intervenor initially

refused but, upon petitioner’s instance, allowed her a quick

glance at the return.   Petitioner noticed that intervenor had

claimed a casualty loss deduction of $35,000 for a break-in to

their rental car while they were vacationing in Hawaii.
                               - 4 -

Intervenor had overstated the amount of the casualty loss

deduction, and as a result, petitioner refused to sign the

return.

     Petitioner’s refusal to sign the return angered intervenor.

He grabbed petitioner’s left arm and twisted it several times,

resulting in bruising.   He then struck petitioner on the back of

the head with an open hand and pulled her hair with both hands.

Finally, intervenor pushed petitioner on the jaw.    Petitioner

still refused to sign the return.   Later that night, intervenor

cornered petitioner in the bathroom and shoved her against the

wall.   He ordered her to the kitchen table and threatened her

with physical harm and threatened that she would never see her

children again if she did not sign the return.   Petitioner,

fearing for her safety, placed a scribble in the signature line

of the return.

     The next day, April 4, 2007, intervenor presented petitioner

with a new version of the return in which he had removed the

$35,000 casualty loss.   Fearing for her safety, petitioner signed

the return without review.   On or around April 10, 2007,

intervenor flew to Hong Kong on a business trip.    That day,

petitioner’s friend drove her to the San Jose police station

where she filed a report about the April 3 abuse.

     On April 19, 2007, petitioner filed a petition for

dissolution of marriage in the Superior Court of California,
                                - 5 -

Santa Clara County, and also applied for a temporary restraining

order against intervenor.    The superior court ordered intervenor

to complete a 52-week domestic violence program and ordered that

intervenor have supervised visitation of his children.      On July

3, 2008, the superior court issued petitioner a restraining order

against intervenor.    Shortly thereafter, petitioner and

intervenor reconciled.

     In or around December 2008 respondent began examining

petitioner and intervenor’s 2006 joint return.      Intervenor did

not allow petitioner to participate in the examination of their

2006 joint return.    In March 2009 intervenor approached

petitioner and asked that she sign several documents that would

have removed the IRS agent assigned to their case and given

intervenor sole authority to communicate with respondent.

Petitioner refused to sign the documents.      Upon hearing her

refusal, intervenor began yelling.      A neighbor called the San

Jose police department, and intervenor was arrested.      On March 3,

2009, petitioner obtained an emergency protective order against

intervenor.   On March 5, 2009, petitioner filed a petition for a

dissolution of marriage for a second time with the Superior Court

of California, Santa Clara County.      On March 10, 2011, the

superior court entered a judgement of dissolution, dissolving

petitioner and intervenor’s marriage effective December 6, 2010.
                                - 6 -

     On October 28, 2009, during examination of petitioner and

intervenor’s 2006 joint return, petitioner submitted a Form 8857,

Request for Innocent Spouse Relief, to respondent.    On February

10, 2010, respondent mailed petitioner a letter containing Form

4549 and Form 866-A.    As part of the Form 4549, respondent

acknowledged petitioner’s request for innocent spouse relief.

However, because of petitioner and intervenor’s conflicting

accounts as to domestic violence and the running of the statute

of limitations, respondent deferred ruling on petitioner’s

request for innocent spouse relief until after determining the

2006 deficiency.    On March 30, 2010, respondent mailed petitioner

and intervenor a statutory notice of deficiency for taxable year

2006.    On April 22, 2010, respondent revised the adjustments in

the notice of deficiency and mailed petitioner and intervenor a

revised examination report including Form 4549 and Form 866-A.

         On June 30, 2010, petitioner timely filed a petition with

this Court, asking the Court to determine that:    (1) She is

entitled to relief under the provisions of section 6015, and (2)

she is not liable for the deficiency due for 2006.3   On September

15, 2010, intervenor filed a Form 13, Notice of Intervention, and



     3
      At the time petitioner filed her petition with this Court,
she had sole custody of her three minor children. In 2010 she
worked as a preschool teacher, earning an annual income of
$19,710. Her monthly living expenses equaled $5,113. Intervenor
is not paying child support; thus petitioner receives no
financial help in raising their children.
                               - 7 -

was added as a party to this case.     The trial took place on May

23, 2011, in San Francisco, California.    Thereafter, on September

14, 2011, petitioner filed a motion for leave to file an amended

petition to conform to the evidence, pursuant to Rule 41(b).

Petitioner lodged a proposed amended petition with the

motion for leave.   In the proposed amended petition, petitioner

asked this Court to determine that:    (1) She is an innocent

spouse entitled to relief under section 6015, (2) the 2006 tax

return does not constitute a joint return under section 6013

because petitioner’s signature was executed under duress, and (3)

she is entitled to relief under section 66(c) and therefore is

not subject to the general rule that community property is

taxable one-half to each spouse.4    By order dated September 28,

2011, the Court granted petitioner’s motion for leave to file an

amended petition.

                             OPINION

     Petitioner does not dispute the deficiencies and penalties

respondent determined for the year at issue.    Instead, she claims

that she signed the 2006 joint return under duress and that the

return is not a joint return under section 6013.    Respondent

agrees.   Respondent and petitioner stipulated that petitioner


     4
      In or around January 2011, petitioner submitted an
individual Federal income tax return to respondent with a filing
status of married filing separately for taxable year 2006.
Petitioner reported only her income as a preschool teacher and
excluded intervenor’s income pursuant to relief under sec. 66(c).
                                - 8 -

signed the return under duress and is therefore not liable for

the deficiency and penalty at issue.    Intervenor disputes

petitioner’s claim of duress.   As a threshold matter, we note

that “All concessions, including stipulated settlement

agreements, are subject to the Court’s discretionary review” and

may be rejected in the interests of justice.    McGowan v.

Commissioner, 67 T.C. 599, 607 (1976).

I.   Duress

     Section 6013(a) permits a husband and wife to file jointly a

single tax return.   Where spouses elect to file a joint return

for a taxable year, they are required to compute their tax for

the taxable year on the aggregate income of both spouses, and the

liability for that tax is joint and several.    See sec.

6013(d)(3).   However, where one spouse signs a return for a

taxable year under duress, it is not a joint return for that year

for purposes of section 6013, and the spouse who signed the joint

return under duress will not be held jointly and severally liable

for any deficiency in tax that the Commissioner determines.    See

Stanley v. Commissioner, 81 T.C. 634, 637-638 (1983); sec.

1.6013-4(d), Income Tax Regs.

     In order to prove that a taxpayer signed a joint return

under duress, the taxpayer must show (1) that the taxpayer was

unable to resist the demands of the taxpayer’s spouse to sign the

joint return and (2) that the taxpayer would not have signed the
                                - 9 -

joint return absent the constraint that the taxpayer’s spouse

applied to the taxpayer’s will.     Stanley v. Commissioner, supra

at 638.   The determination of whether the taxpayer signed a joint

return under duress is dependent on the facts and is measured by

a wholly subjective standard.     Id.    We must therefore look

closely at the circumstances in which petitioner signed the 2006

return.

     Intervenor claims that he did not force petitioner to sign

the 2006 return.   He claims that he and petitioner together

prepared the joint return and both voluntarily signed the return.

We do not find intervenor’s testimony credible.      Though we can

never truly know what happened on the night of April 3, 2007, we

are more inclined to believe petitioner’s version of the events

of that night.   Petitioner submitted and we received evidence

showing bruising on her left arm.       Petitioner also filed a police

report of the incident and obtained a restraining order against

intervenor.   Finally, petitioner documented a pattern of abuse by

intervenor leading up to the night of April 3.

     Under the first part of the test for duress, petitioner must

show that she was unable to resist the demands of intervenor to

sign the joint return.   Petitioner demonstrated a pattern of

abuse by intervenor leading up to the signing of the return.

This abuse culminated in a night of violence on April 3, 2007, in

response to her refusal to sign the return.      Duress may exist not
                               - 10 -

only when a gun is held to one’s head while a signature is being

subscribed to a document.   A long-continued course of mental

intimidation can be equally effective, and perhaps more so, as a

form of duress.   Brown v. Commissioner, 51 T.C. 116, 119-120

(1968).

      Under the second part of the test for duress, petitioner

must show that she would not have signed the joint return absent

the constraint that intervenor applied to her will.   Petitioner

testified that she refused to sign the original return and only

after intervenor abused her and threatened her did she

reluctantly sign the return.   On the record before us, we find it

more likely than not that petitioner signed the 2006 return under

duress.   Therefore, we hold that the 2006 return is not a joint

return under section 6013 and that petitioner is not jointly and

severally liable for any deficiency arising from that return.

Instead, petitioner is required to file an individual Federal

income tax return with a filing status of married filing

separately for the 2006 taxable year.

II.   Section 66(c)

      California is a community property State, and under section

66, married couples who do not file joint tax returns “generally

must report half of the total community income earned by the

spouses during the taxable year” unless an exception applies.

Sec. 1.66-1(a), Income Tax Regs.   Petitioner submitted an
                              - 11 -

individual return to respondent in which she reported only her

income as a preschool teacher and excluded intervenor’s income

pursuant to her agreement with respondent that she qualifies for

relief from including community income under section 66(c).

Petitioner now asks us to conclude that she falls within the

section 66(c) exception.

     We must now consider whether we have jurisdiction to

redetermine a taxpayer’s separate income tax liability when the

statutory notice of deficiency is based upon a joint return and

where we have decided that no joint return was filed.   We have

previously considered this question, and we hold that we do have

jurisdiction to redetermine petitioner’s separate income tax

liability.   See, e.g. Stanley v. Commissioner, supra at 638-639.

     Section 66(c) offers two types of relief--“traditional” and

“equitable”.   See Lantz v. Commissioner, 132 T.C. 131, 142

(2009), revd. on other grounds 607 F.3d 479 (7th Cir. 2010); Felt

v. Commissioner, T.C. Memo. 2009-245, affd. 433 Fed. Appx. 293

(5th Cir. 2011).   To qualify for traditional relief under section

66(c), petitioner must satisfy all four conditions provided in

paragraphs (1)-(4) of section 66(c).5   Petitioner does not


     5
      In particular, sec. 66(c) provides:

          SEC. 66(c). Spouse Relieved of Liability in
     Certain Other Cases.--Under regulations prescribed by
     the Secretary, if--

                                                    (continued...)
                              - 12 -

qualify for traditional relief as she does not satisfy the

section 66(c)(3) requirement that she establish that she did not

know of, and had no reason to know of, the item of community

income.

     A taxpayer’s knowledge of an item of community income must

be determined with reference to her knowledge of the particular

income-producing activity.   See McGee v. Commissioner, 979 F.2d



     5
      (...continued)
               (1) an individual does not file a joint
          return for any taxable year,

               (2) such individual does not include in
          gross income for such taxable year an item of
          community income properly includible therein
          which, in accordance with the rules contained
          in section 879(a), would be treated as the
          income of the other spouse,

               (3) the individual establishes that he
          or she did not know of, and had no reason to
          know of, such item of community income, and

               (4) taking into account all facts and
          circumstances, it is inequitable to include
          such item of community income in such
          individual’s gross income,

     then, for purposes of this title, such item of
     community income shall be included in the gross income
     of the other spouse (and not in the gross income of the
     individual). Under procedures prescribed by the
     Secretary, if, taking into account all the facts and
     circumstances, it is inequitable to hold the individual
     liable for any unpaid tax or any deficiency (or any
     portion of either) attributable to any item for which
     relief is not available under the preceding sentence,
     the Secretary may relieve such individual of such
     liability.
                              - 13 -

66, 70 (5th Cir. 1992), affg. T.C. Memo. 1991-510; Hardy v.

Commissioner, T.C. Memo. 1997-97, affd. 181 F.3d 1002 (9th Cir.

1999).   Petitioner was aware that intervenor was employed by

Fairchild Semiconductor International, Inc., and Spansion, Inc.,

and was aware that his wages were used to pay their household

living expenses.   While petitioner may not have known the precise

amount of intervenor’s salary, she knew of his employment.

Accordingly, we find that petitioner knew, or had reason to know,

about intervenor’s wages.

     We now consider whether petitioner is entitled to equitable

relief under section 66(c).   Respondent determined that

petitioner was entitled to equitable relief, but intervenor

challenges that determination.   Under regulations prescribed by

the Secretary, if taking into account all facts and

circumstances, it is inequitable to include an item of community

income in a spouse’s gross income, then such item of community

income shall be included in the gross income of the other spouse

(and not in the gross income of the individual).   Sec. 66(c)(4);

sec. 1.66-4(b), Income Tax Regs.

     The Commissioner has outlined procedures the Commissioner

will follow in determining whether a requesting spouse qualifies

for equitable relief under section 66(c).   See Rev. Proc. 2003-

61, 2003-2 C.B. 296.   The requesting spouse must meet five

threshold conditions before the Commissioner will consider a
                                - 14 -

request for relief.     Id. sec. 4.01, 2003-2 C.B. at 297.

Respondent concedes that petitioner has met the preliminary

requirements for relief.     We agree.

     A.   Balancing Test for Determining Whether Section 66(c)
          Equitable Relief Would Be Appropriate

     Where, as here, the requesting spouse meets the five

threshold conditions set forth in Rev. Proc. 2003-61, sec. 4.01,

we employ a balancing test to determine whether, taking into

account all the facts and circumstances, it would be inequitable

to hold the requesting spouse liable for all or part of the

unpaid liability.     The Commissioner has listed factors the

Commissioner considers in determining whether a taxpayer

qualifies for relief.     See id. sec. 4.03, 2003-2 C.B. at 298.

The factors include whether the requesting spouse:     (1) Is

separated or divorced from the nonrequesting spouse, (2) would

suffer economic hardship if relief were denied, (3) had knowledge

or reason to know that the nonrequesting spouse would not pay the

income tax liability, (4) received significant economic benefit

from the unpaid income tax liability, (5) complied with income

tax laws in years after the year at issue, (6) was abused by the

nonrequesting spouse, and (7) was in poor health when signing the

return or requesting relief; and whether the nonrequesting spouse

had a legal obligation to pay the outstanding tax liability.       Id.

sec. 4.03(2).    The list is nonexhaustive, and no single factor is

determinative.    Id.   We address each of the factors in turn.
                                 - 15 -

           1.   Marital Status

     We first consider marital status.        This factor weighs in

favor of the requesting spouse if she is separated or divorced

from the nonrequesting spouse.      Id. sec. 4.03(2)(i).       The parties

agree that petitioner is divorced from intervenor.        This factor

weighs in favor of relief.

           2.   Economic Hardship

     The second factor is whether the requesting spouse would

suffer economic hardship if relief were denied.        A denial of

section 66(c) relief imposes economic hardship if it prevents the

requesting spouse from being able to pay her reasonable basic

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

Regs.   Reasonable basic living expenses are based on the

taxpayer’s circumstances but do not include amounts needed to

maintain a luxurious standard of living.        Sec. 301.6343-

1(b)(4)(i), Proced. & Admin. Regs.        Relevant circumstances

include the taxpayer’s age, ability to earn an income, number of

dependents, and status as a dependent.        Sec. 301.6343-

1(b)(4)(ii)(A), Proced. & Admin. Regs.

     Petitioner is a part-time teacher.        In 2010 she earned

$19,710.   She has sole custody of her and intervenor’s three

minor children and is solely responsible for their support

because intervenor is not paying child support.        Her monthly

expenses equal $5,113.
                                - 16 -

     On the record, we find that petitioner would suffer economic

hardship if relief is not granted.       This factor weighs in favor

of relief.

          3.      Knowledge or Reason To Know That Nonrequesting
                  Spouse Would Not Pay Liability

     A third factor focuses on whether the requesting spouse knew

or had reason to know of the item as to which section 66(c)

relief is sought.    We find that petitioner knew or had reason to

know of the community income.    This factor weighs against relief.

             4.   Nonrequesting Spouse’s Legal Obligation To Pay
                  Liability

     A fourth consideration is whether the nonrequesting spouse

had a legal obligation to pay the tax liability.      Intervenor does

not have a legal obligation to pay the income tax liabilities

pursuant to a divorce decree or other agreement.      Therefore,

respondent determined that this factor is neutral, and we have no

information to conclude otherwise.

             5.   Economic Benefit From Items Giving Rise to
                  Liability

     A fifth consideration is whether the requesting spouse

received significant benefit from the community income.

Petitioner credibly testified that she received no gifts or other

benefits beyond normal support.    This factor weighs in favor of

relief.
                                - 17 -

           6.     Subsequent Compliance With Income Tax Laws

     A sixth consideration is whether the requesting spouse made

a good faith effort to comply with income tax laws in subsequent

years.    Respondent stipulates that petitioner has been in

compliance with the income tax laws since 2006.     Therefore, this

factors weighs in favor of relief.

           7.     Abuse by Nonrequesting Spouse

     As discussed above, we find that intervenor abused

petitioner.     Therefore this factor weighs in favor or relief.

           8.     Poor Health When Signing Return or Requesting
                  Relief

     Petitioner did not allege that she was in poor health when

she signed the return or when she requested relief.     Therefore,

respondent determined that this factor is neutral, and we have no

information to decide otherwise.

     B.    Conclusion

     In summary, five factors weigh in favor of relief, one

factor weighs against relief, and two factors are neutral.     After

weighing the testimony and evidence in this fact-intensive and

nuanced case, we find that petitioner is entitled to relief under

section 66(c).

III. Section 6015

     Having found that petitioner signed the 2006 joint return

under duress, we need not address petitioner’s section 6015 claim
                              - 18 -

for relief because a return signed under duress is not a joint

return.   See Brown v. Commissioner, 51 T.C. at 120-121.

     In reaching our holdings, we have considered all arguments

made, 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.
