                       T.C. Memo. 1999-32



                     UNITED STATES TAX COURT



    DAVID L. WIKSELL AND MARGARET ANN CARPENDER, Petitioners
         v. COMMISSIONER OF INTERNAL REVENUE, Respondent*



    Docket No. 11752-91.              Filed February 2, 1999.



         P filed a Motion for Reconsideration of our opinion in
    Wiksell v. Commissioner, T.C. Memo. 1998-3, arguing that
    sec. 6015(c)(3)(C), I.R.C., enacted by sec. 3201(a),
    Internal Revenue Service Restructuring and Reform Act of
    1998, Pub. L. 105-206, 112 Stat. 734, requires us to
    consider: (1) Whether P had "actual knowledge" of certain
    checks which gave rise to the deficiency, and (2) if so,
    whether P signed her 1984 and 1985 joint tax returns under
    duress. Held: Our opinion in Wiksell v. Commissioner, T.C.
    Memo. 1998-3, has adequately addressed whether P had "actual
    knowledge" with respect to income, not reported on P's joint
    return, derived from the receipt of checks from her
    husband's company. Held, further, the issue of duress has
    previously been considered and rejected. Wiksell v.
    Commissioner, 90 F.3d 1459, 1462 (9th Cir. 1996), revg. and
    remanding T.C. Memo. 1994-99, on remand T.C. Memo. 1998-3.
    Held, further, P's Motion for Reconsideration is denied.


     *This opinion supplements our opinions in Wiksell v.
Commissioner, T.C. Memo. 1994-99, revd. and remanded 90 F.3d 1459
(9th Cir. 1996), and Wiksell v. Commissioner, T.C. Memo. 1998-3.
                                 - 2 -



     Bruce I. Hochman and Michel R. Stein, for petitioner

Margaret Ann Carpender.


     Steven M. Roth, for respondent.



                    SUPPLEMENTAL MEMORANDUM OPINION

     NIMS, Judge:    Margaret Ann Carpender (petitioner) moves the

Court for reconsideration of its memorandum opinion at T.C. Memo.

1998-3.   See Rule 161.   Unless otherwise stated, section

references are to sections of the Internal Revenue Code in effect

for the years in issue.    Rule references are to the Tax Court

Rules of Practice and Procedure.

     In Wiksell v. Commissioner, T.C. Memo. 1998-3, we

reevaluated our prior decision in Wiksell v. Commissioner, T.C.

Memo. 1994-99, as directed by the Ninth Circuit on remand in

Wiksell v. Commissioner, 90 F.3d 1459 (9th Cir. 1996).       We held

that petitioner was entitled to innocent spouse relief under

section 6013(e) for deficiencies in excess of the amounts

relating to checks she received from her husband's company,

Hitech, and that it would not be inequitable to hold petitioner

liable for deficiencies related to the Hitech checks.    Wiksell v.

Commissioner, T.C. Memo. 1998-3.

     In her motion to reconsider our decision in Wiksell v.

Commissioner, T.C. Memo. 1998-3, petitioner argues that section

6015(c)(3)(C), enacted by section 3201(a) of the Internal Revenue

Service Restructuring and Reform Act of 1998 (RRA 1998), Pub. L.
                                - 3 -


105-206, 112 Stat. 734, requires us to reconsider: (1) Whether

petitioner had "actual knowledge" of the Hitech checks which gave

rise to the deficiency, and (2) if so, whether petitioner signed

her 1984 and 1985 joint tax returns under duress.

     Respondent argues that (1) our prior opinions have already

addressed the question and found that petitioner had actual

knowledge of the Hitech checks, and (2) our prior opinions and

the opinion of the Court of Appeals for the Ninth Circuit have

addressed the question and found that petitioner did not show

duress.

     For the reasons stated below, we agree with respondent.

                              Background

     We adopt the findings of fact in our prior memorandum

opinions, Wiksell v. Commissioner, T.C. Memo. 1994-99, and

Wiksell v. Commissioner, T.C. Memo. 1998-3, as modified in the

latter.   For convenience, we repeat the facts necessary to

elucidate the ensuing discussion.

     David L. Wiksell (David) and petitioner were married in

1960, legally separated in 1988, and divorced in December 1992.

Petitioner, formerly Margaret Ann Wiksell, is now known as

Margaret Ann Carpender.   During the years in issue, and

throughout most of her marriage, petitioner maintained her own

separate checking accounts.

     Sometime in 1982 or 1983, David started Hitech Recovery

Systems, Inc. (Hitech).   David told petitioner that Hitech was to

engage in the extraction of oil from old oil wells.
                                 - 4 -


     Sometime before the spring of 1984, David began working as a

real estate investment adviser for Comstock Financial Services,

Inc. (Comstock Financial), an insurance agency owned and operated

by Roy L. Comstock (Comstock).    During the spring of 1984, David

told petitioner that Comstock was investing in Hitech.

     During 1984 and 1985, David maintained a business checking

account under the name Hitech.    Petitioner was not a signatory on

this account.   David periodically gave petitioner checks drawn on

the Hitech account and made payable to "Margaret Wiksell", which

she deposited into her two personal checking accounts.   In 1984,

petitioner was given 23 checks from Hitech totaling $54,500.    In

1985, petitioner received 15 Hitech checks totaling $140,500 from

Hitech.

     In 1984 and 1985, petitioner wrote checks on her accounts

totaling $78,781.38 and $149,444.32, respectively.   Among other

things, these checks were used for clothes; loans to a child;

charitable and political contributions; entertainment and gifts;

home furnishings; home repair and maintenance; credit card

payments; mortgage payments; and numerous other miscellaneous

expenses.

     In January or February 1987, David was arrested and charged

with fraud in connection with a scam perpetrated by Roy Comstock,

Abraham Boldt, and David, wherein it was alleged that at least $2

million, fraudulently obtained from unsuspecting investors in

Comstock Financial, was diverted to Hitech.   On January 13, 1988,
                                - 5 -


David pleaded guilty to various counts of fraud involving the

sale of unregistered securities in connection with his

participation in the fraudulent investment scheme.

     On their 1984 and 1985 returns, David and petitioner

reported adjusted gross income of $10,525 and $4,298,

respectively, of which approximately $9,801 in 1984 and $1,760 in

1985 represented petitioner's wages from part-time nursing.

Petitioner signed the 1984 return on June 16, 1987, and the 1985

return on November 9, 1987.

     At the time she signed the 1984 and 1985 returns, petitioner

questioned David about why the returns contained no income

reflecting the money that he had given her in those years.    She

stated that he gave her

     such a bizarre explanation that I don't think I could even
     repeat it, I mean what he told me. * * * It was something
     along the fact that it had been investment--that he had
     investments in * * * [Hitech] that had been lost and this
     was return, or something along those lines. * * * it just
     didn't make sense to me.

Petitioner suspected that David was lying, but she would not

press him further on the matter.    David had gotten violent when

Margaret or others "probed" into his finances.

                              Discussion

     Reconsideration under Rule 161 serves the limited purpose of

correcting manifest errors of fact or law, also allowing for the

introduction of newly discovered evidence that could not have

been introduced before the filing of an opinion, even if the

moving party had exercised due diligence.   See Estate of
                               - 6 -


Trenchard v. Commissioner, T.C. Memo. 1995-232; see Traum v.

Commissioner, 237 F.2d 277, 281 (7th Cir. 1956), affg. T.C. Memo.

1955-127.   The granting of a motion for reconsideration rests

within the discretion of the Court, and we usually do not

exercise our discretion to grant such a motion absent a showing

of unusual circumstances or substantial error.    Vaughn v.

Commissioner, 87 T.C. 164, 166-167 (1986); CWT Farms, Inc. v.

Commissioner, 79 T.C. 1054, 1057 (1982), affd. 755 F.2d 790 (11th

Cir. 1985); Haft Trust v. Commissioner, 62 T.C. 145, 147 (1974),

affd. on this issue, vacated and remanded 510 F.2d 43, 45 n.1

(1st Cir. 1975).

     Reconsideration is not the appropriate forum for rehashing

previously rejected arguments or tendering new legal theories to

reach the end desired by the moving party.    Estate of Trenchard

v. Commissioner, supra.   The Court tries all issues raised in a

case in one proceeding to promote orderly litigation and to

further judicial economy by discouraging piecemeal and protracted

litigation.   Vaughn v. Commissioner, supra at 166-167; CWT Farms,

Inc. v. Commissioner, supra at 1057; Stoody v. Commissioner, 67

T.C. 643 (1977); Haft Trust v. Commissioner, supra at 147.

     However, the RRA 1998 was enacted on July 22, 1998, after

the previous opinions in this case.    Section 3201(g)(1) of the

RRA 1998, 112 Stat. 740, provides that section 6015 applies to

any tax liability arising after July 22, 1998, and any tax

liability arising on or before July 22, 1998, and remaining

unpaid as of that date.   Section 3201(g)(2) of the RRA 1998
                               - 7 -


provides that the 2-year period for electing innocent spouse

relief or separate liability will not expire before the date

which is 2 years after the date of the first collection activity

after July 22, 1998.   The parties appear implicitly to assume

that the relief provisions of section 6015 could be retroactively

available in this case.   Since we deem this to be a showing of

"unusual circumstances", we entertain petitioner's Motion for

Reconsideration for that reason.

     Section 6015(c)(1) allows a taxpayer who files a joint

return to elect to limit such individual's liability for any

deficiency with respect to such joint return if the requirements

of section 6015(c)(3)(A) are met.   Section 6015(c)(3)(A)

provides:

       (i) In General.--An individual shall only be eligible
     to elect the application of this subsection if--

            (I) at the time such election    is filed, such
       individual is no longer married to,   or is legally
       separated from, the individual with   whom such individual
       filed the joint return to which the   election relates * * *

Respondent concedes, and we agree, that petitioner meets this

requirement.

     Section 6015(c)(3)(C) provides that

     If the Secretary demonstrates that an individual making an
     election under this subsection had actual knowledge, at the
     time such individual signed the return, of any item giving
     rise to a deficiency (or portion thereof) which is not
     allocable to such individual under subsection (d), such
     election shall not apply to such deficiency (or portion).
     This subparagraph shall not apply where the individual with
     actual knowledge establishes that such individual signed the
     return under duress. [Emphasis added.]
                              - 8 -


Actual Knowledge

     Petitioner asserts that we should consider whether for

purposes of section 6015(c), she had actual knowledge of the

Hitech checks at the time she signed the 1984 and 1985 returns.

Petitioner points out that the standard of "actual knowledge"

under section 6015(c)(3)(C) is a narrower standard than that of

"known or should have known" under section 6013(e).    The

conference committee report states that "actual knowledge must be

established by the evidence and shall not be inferred based on

indications that the electing spouse had a reason to know."     H.

Conf. Rept. 105-599, at 253 (1998).   Furthermore, section

6015(c)(3)(C) places the burden to establish actual knowledge on

respondent.

     Petitioner acknowledges that we found that she "was,

however, precisely aware of the amounts derived from Hitech via

David that actually passed through her hands."   Wiksell v.

Commissioner, T.C. Memo. 1998-3.   However, petitioner argues that

we relied upon the same factors to find that petitioner had

"reason to know" of the Hitech checks in Wiksell v. Commissioner,

T.C. Memo. 1994-99, as we did to conclude that petitioner was

"precisely aware" of the Hitech checks in Wiksell v.

Commissioner, T.C. Memo. 1998-3.   Therefore, petitioner

concludes, "precisely aware" must mean something other than

actual knowledge as contemplated by Congress, and reconsideration

is appropriate.
                                - 9 -


       In Wiksell v. Commissioner, T.C. Memo. 1994-99, we stated

that

          We do not believe it necessary to repeat all of our
       findings of fact to demonstrate our reasons for concluding
       that * * * [petitioner] not only had reason to know, but
       actually had knowledge, that the returns contained
       substantial understatements. * * * [Petitioner's] actual
       knowledge is established by the simple fact that * * *
       [petitioner] admitted that she asked David why there was no
       income on the returns reflecting the money that had been
       coming to her through him from Hitech, and which the family
       had been living on during the years in issue. * * *

We subsequently stated:

       [Petitioner] also had reason to know of the
       substantial understatements. She was well aware of David's
       involvement in Hitech, and during 1984 she received 23
       Hitech checks from David totaling $54,500, which she
       deposited into her separate checking accounts. During 1985,
       she received 15 Hitech checks from David totaling $140,500
       which she deposited into her separate checking accounts.
       Throughout these years * * * [petitioner] wrote large checks
       on her individual account to charities, political
       candidates, and for home improvements. She had to know that
       her own meager earnings from nursing were vastly
       insufficient to provide these funds. [Id.]

       In Wiksell v. Commissioner, T.C. Memo. 1998-3, we stated:

            Petitioner was, however, precisely aware of the amounts
       derived from Hitech via David that actually passed through
       her hands. As we have found, in 1984, petitioner was given
       23 checks from Hitech, totaling $54,500. In 1985,
       petitioner received 15 Hitech checks totaling $140,500.
       During these same years petitioner spent substantial amounts
       for clothing for herself and her children, loans to a child,
       charitable and political contributions, entertainment and
       gifts, home furnishings, home repair and maintenance, credit
       card payments, mortgage payments, and numerous other
       miscellaneous expenses.

       In essence, petitioner argues that because we used similar

facts to derive two different conclusions (i.e., "had reason to

know" versus "precisely aware"), it follows that these facts

could not have justified both conclusions.   According to
                                - 10 -


petitioner's reasoning, since we have already concluded that

these facts are indications of "reason to know", they cannot form

the basis for "actual knowledge" under section 6015(c).      This

argument facilely ignores the obvious fact that the "actual

knowledge" concept subsumes the concept of "reason to know";

i.e., if a person has actual knowledge of a fact, she also has

reason to know of it (the converse, of course, not necessarily

being true).

      Petitioner's argument is illogical, and we find it

unpersuasive.    Our opinion in Wiksell v. Commissioner, T.C. Memo.

1998-3, does not indicate that we inferred petitioner's actual

knowledge "based on indications that the electing spouse had a

reason to know."    H. Conf. Rept. 105-599, supra at 253.    We think

in this particular case that the same facts used to determine

that petitioner "had reason to know" also amply establish that

petitioner had "actual knowledge" or a "precise awareness".

     Petitioner further argues that section 6015(c) has changed

the culpability standard from objective under section 6013(e) to

subjective.     Under section 6013(e)(1)(C), a taxpayer spouse must

establish "that in signing the return he or she did not know, and

had no reason to know, that there was * * * [a] substantial

understatement".    Petitioner points out that findings of

objectivity dominate the record.    As such, petitioner concludes,

our findings and holdings are consistent with the objective

standard, and accordingly, reconsideration is warranted.
                              - 11 -


     We dismiss petitioner's argument because it ignores the

language of our finding that petitioner was "precisely aware" of

the Hitech checks she received from David.   Our finding was based

on petitioner's subjective awareness of the Hitech check deposits

and her subjective awareness that she wrote checks in amounts far

in excess of the modest income she earned as a part-time nurse in

1984 and 1985.

     Based on the foregoing, we hold that our opinion in Wiksell

v. Commissioner, T.C. Memo. 1998-3, has adequately addressed

whether petitioner had actual knowledge with respect to the

Hitech checks she received from David.

Duress

     Petitioner argues that neither the Tax Court nor the U.S.

Court of Appeals for the Ninth Circuit could possibly have

considered the significance of the term "duress" as contemplated

by legislative mandate, as that concept had just been newly

codified in section 6015.   Section 6015(c)(3)(C) provides in

pertinent part: "This subparagraph shall not apply where the

individual with actual knowledge establishes that such individual

signed the return under duress."

     Neither the statute nor the legislative history indicate

that Congress intended to define the term "duress".   See sec.

6015(c)(3)(C); H. Conf. Rept. 105-599, supra at 251-255.     The

U.S. Court of Appeals for the Ninth Circuit directly addressed

the question of whether petitioner signed the returns in question

under duress and concluded that she did not.   Wiksell v.
                             - 12 -


Commissioner, 90 F.3d at 1462.    Petitioner may not again rehash

her previously rejected arguments regarding duress.    See Estate

of Trenchard v. Commissioner, T.C. Memo. 1995-232.

     Petitioner has failed to identify a persuasive reason to

grant her Motion for Reconsideration.

     To reflect the foregoing,

                                      An appropriate order

                                 will be issued denying the

                                 Motion for Reconsideration.
