                   T.C. Summary Opinion 2005-133



                      UNITED STATES TAX COURT



                  LUIS A. VASQUEZ, Petitioner, AND
         WENDY HOUDESHELL, n.k.a. WENDY GRAY, Intervenor v.
            COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 19130-04S.              Filed September 8, 2005.


     Luis A. Vasquez, pro se.

     Joshua M. Wease, for intervenor.

     A. Gary Begun, for respondent.



     DEAN, Special Trial Judge:   This is a case arising under

sections 6015 and 7463, as in effect at the time the petition was

filed.   Unless otherwise indicated, subsequent section references

are to the Internal Revenue Code of 1986 as amended, and 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.

     Respondent determined a deficiency in petitioner’s Federal

income taxes for 2001 of $2,210.    After a timely petition was

filed, respondent conceded that petitioner is entitled to relief

from joint and several liability under section 6015(c).1     Wendy

Houdeshell (intervenor) filed a Notice of Intervention.     The

Court must decide whether respondent erred in granting relief to

petitioner under section 6015(c).

                             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 was filed, and at the time

notice of intervention was filed, petitioner and intervenor

resided in Dearborn, Michigan.

     During 2001, petitioner was married to intervenor.     They did

not reside together during the year.      Intervenor resided in the

marital home from January through June 2001.      When she moved out,

petitioner moved back in and resided there for the remainder of

the year.    They divorced on December 9, 2002.




     1
      Respondent also concedes that petitioner’s deficiency
before the application of sec. 6015(c) is $1,629.
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     Petitioner, a carpenter, completed 3 years of college

coursework and 4 years of trade school.   Intervenor has a high

school diploma and completed 2 years of trade school.

     During their marriage, petitioner and intervenor had a joint

bank account.   The statements for that account were mailed to the

marital home.   When intervenor moved out of the marital home in

June 2001, she had her mail, including the joint banking

statements, forwarded to her new address.   Petitioner did not

have access to the account statements and did not have access to

electronic banking for the joint account during 2001.

     On advice of counsel, petitioner removed his name from the

joint account and opened his own bank account around June or July

2001.   On further advice of counsel, petitioner did not attempt

to withdraw any funds from the joint account during 2001.

     Intervenor was employed by General Motors Corporation (GM)

during 2001.    She had a 401(k) account with GM that she opened in

June 1998 in her name alone.   Intervenor’s approval was the only

action required to make a withdrawal from the account.

Intervenor received a distribution of $5,790 from the GM 401(k)

during 2001.     Petitioner and intervenor jointly filed a Form

1040, U.S. Individual Income Tax Return, for 2001.   Petitioner

provided his Forms W-2, Wages and Tax Statement, directly to the

return preparer.   He and intervenor signed the return at separate
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times.   Both parties reviewed the return before they signed it.

The GM 401(k) distribution was not reported on the return.

     Respondent issued to petitioner and intervenor a notice of

deficiency regarding the unreported distribution.    Petitioner

timely filed a petition requesting innocent spouse relief and

prepared a Form 12510, Questionnaire for Requesting Spouse.

     Petitioner and respondent have stipulated that petitioner is

entitled to relief under section 6015(c) and that no deficiency

is due from petitioner.

                             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); Cheshire v. Commissioner, 115

T.C. 183, 188 (2000), affd. 282 F.3d 326 (5th Cir. 2002).

     Relief from joint and several liability is available to

certain taxpayers under section 6015.     Under section 6015(c), an

individual who is eligible and so elects, may limit his or her

liability to the portion of a deficiency that is properly

allocable to the taxpayer as provided in section 6015(d).    Sec.

6015(c)(1).   Under section 6015(d)(3)(A), generally, any items

that give rise to a deficiency on a joint return, e.g., the

unreported early distribution from the GM 401(k) account, shall

be allocated to the individual filing the return in the same
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manner as it would have been allocated if the individual had

filed a separate return for the taxable year.

     A taxpayer is eligible to elect the application of section

6015(c) if, at the time the election is filed, the taxpayer is no

longer married to or is legally separated from the individual

with whom the taxpayer filed the joint return to which the

election relates.   Sec. 6015(c)(3)(A)(i)(I).   The election under

section 6015(c) may be made at any time after a deficiency for

such year is asserted and no later than 2 years after the date on

which the Commissioner has begun collection activities with

respect to the taxpayer making the election.    Sec. 6015(c)(3)(B).

Petitioner and intervenor were divorced on December 9, 2002, and

petitioner’s election was made soon after his receipt of the

notice of deficiency.    Therefore, petitioner is eligible to elect

the application of section 6015(c) to limit his liability for the

2001 tax deficiency.

     Relief under section 6015(c) is not available to petitioner

if respondent demonstrates that petitioner had actual knowledge

of the item giving rise to the deficiency.    Sec. 6015(c)(3)(C);

King v. Commissioner, 116 T.C. 198, 203 (2001).    The “‘knowledge

standard’” for purposes of section 6015(c)(3)(C) “‘is an actual

and clear awareness (as opposed to reason to know) of the

existence of an item which gives rise to the deficiency (or

portion thereof).’”     King v. Commissioner, supra at 203 (quoting
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Cheshire v. Commissioner, 115 T.C. 183, 195 (2000)).       “In the

case of omitted income * * *, the electing spouse must have an

actual and clear awareness of the omitted income.”       Id.

     Respondent agrees that petitioner is entitled to relief

under section 6015(c).    Intervenor filed her notice of

intervention for the purpose of opposing petitioner’s claim for

relief under section 6015.    If intervenor offers sufficient

evidence that petitioner had “actual knowledge” of the early

retirement distribution, then petitioner should not be entitled

to relief under section 6015(c).

     Intervenor’s testimony that petitioner had actual knowledge

about the early retirement distribution is not corroborated by

other testimony or evidence.    The record demonstrates that

intervenor had sole control over the GM 401(k) account and

petitioner had no access to the statements for their joint bank

account.    The record contains no facts which show error in

respondent’s position, and the Court concludes that petitioner

did not have actual knowledge of the factual circumstances

regarding the distribution and that petitioner is entitled to

relief from joint and several liability under section 6015(c).

     Reviewed and adopted as the report of the Small Tax Case

Division.


                                        Decision will be entered

                                for petitioner.
