                  T.C. Summary Opinion 2004-176



                     UNITED STATES TAX COURT



                   VICKI JO JAMES, Petitioner
         v. COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 9856-03S.             Filed December 28, 2004.



     Steve Allen Claus, for petitioner.

     Abbey B. Garber and Adam L. Flick (specially recognized),

for respondent.



     CARLUZZO, 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.1    The decision to be




     1
       Unless otherwise indicated, subsequent section references
are to the Internal Revenue Code in effect at the time the
petition was filed.
                                - 2 -

entered is not reviewable by any other court, and this opinion

should not be cited as authority.

     In a final notice of determination, dated April 9, 2003,

respondent denied petitioner’s claim for section 6015(f) relief

from her unpaid 1995, 1996, and 1997 Federal income tax

liabilities.   In a timely petition, filed June 24, 2003,

petitioner requests this Court to review respondent’s

determination.   Our jurisdiction to do so is established by

section 6015(e), see Ewing v. Commissioner, 118 T.C. 494, 496-497

(2002), and we review respondent’s determination for abuse of

discretion.    Butler v. Commissioner, 114 T.C. 276, 292-293

(2000).

     The issue for decision is whether respondent’s failure to

relieve petitioner from unpaid Federal income tax liabilities

reported on joint Federal income tax returns for the years 1995,

1996, or 1997 is, for any of those years, an abuse of discretion.

Background

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

the time the petition was filed in this case, petitioner resided

in Plainview, Texas.

     Petitioner and Tommy J. James (petitioner’s former spouse)

had been married for 19 years prior to their divorce in January

1998.   They have two sons, Russell Blake James, born December 2,

1981, and Tyler Martin James, born June 25, 1985 (the children).
                                 - 3 -

Petitioner’s former spouse was a farmer during most of the time

he and petitioner were married.    At trial, when asked by her

attorney how she was employed during her marriage, petitioner

described herself as a “stay-at-home mom.”      Although petitioner

did not participate in the farming operations, from time to time

during their marriage she and her former spouse discussed the

family’s financial situation.

     For years prior to 1995, petitioner and her former spouse

filed joint Federal income tax returns and fully paid the

Federal income tax liabilities reported on those returns.      Due

to financial difficulties apparently caused by the vagaries of

crop production, things changed in 1995.

     For that year, as well as the next, the amount of tax shown

on the joint return of petitioner and her spouse was not fully

paid with the filing of the return.      Of the $25,019 liability2

reported on their 1995 joint return, only $8,500 was paid with

the return.   Apparently, the balance was paid through a series of

installment payments made during 1997 and 1998.      On their 1996

joint return, they reported a tax liability of $26,527 but paid

only $12,919 with that return.    During 1997, a $5,000 payment was

made towards the outstanding 1996 tax liability.      It appears that




     2
       This amount does not include the “estimated tax penalty”
reported on the return.
                               - 4 -

as of the date of trial, no additional payments on petitioner’s

outstanding 1996 tax liability had been made.

     For 1997 petitioner and her former spouse initially filed

timely separate individual returns.    The $17,163 income tax

liability reported on petitioner’s 1997 return remains, for the

most part, unpaid and results almost entirely from reporting her

community property share of her former spouse’s farming income.

The $29,076 income tax liability reported on the separate 1997

return of petitioner’s former spouse was paid in full with the

return.

     Not surprisingly, it appears that petitioner’s domestic and

financial situations deteriorated simultaneously.    As of the

close of 1997, divorce proceedings had been initiated.    As noted

above, petitioner and her former spouse were divorced in January

1998, prior to the date that each had filed a separate 1997

return.   The divorce decree (including other documents

incorporated by reference) required petitioner and her former

spouse to file separate 1997 Federal income tax returns and

presumably that is why they did so.    Other relevant provisions of

the divorce decree:   (1) Obligate petitioner’s former spouse to

pay to petitioner $1,500 per month in child support; (2) award

the marital residence to petitioner; (3) assign the liability for

the mortgage and real estate taxes on the marital residence to

petitioner’s former spouse; (4) provide that petitioner’s
                               - 5 -

former spouse will, under conditions described, pay a portion

of petitioner’s 1997 Federal income tax liability; and (5) in

order to equalize the division of marital property, require

petitioner’s former spouse to sign a $107,782, interest-bearing,

secured “vendor’s lien note” (the note), payable to petitioner in

monthly installments of $1,500, plus annual “balloon” payments of

$12,000.

     During 1998, which petitioner’s former spouse described as a

“good crop year”, he made payments to, or on behalf of,

petitioner as required by the divorce decree.    Starting in 1999

and continuing into 2000, petitioner’s former spouse failed to

make all of the required payments on the note, failed to keep his

child support obligations current, and failed to make all of the

mortgage payments on the marital residence.   As of the close of

1999, petitioner’s former spouse was no longer engaged in

farming.   In September 2000 he initiated a bankruptcy proceeding.

It appears that after the bankruptcy proceeding was commenced,

petitioner received payments of $25,000 and $30,000 from her

former spouse.   The purpose(s) or specific date(s) of the

payments cannot be determined from the record.

     Following her divorce, petitioner sold the marital

residence, and, in sequence, purchased, resided in, and sold two

other residences.   She also graduated from a private college and

began employment as a nurse.   The children lived with petitioner
                                   - 6 -

following her divorce.       When each of her sons reached the

requisite age for a driver’s license, she purchased a car for

him.       The specific dates for the above occurrences cannot be

determined, and it is not clear whether the events occurred

before or after petitioner made her request for section 6015

relief.

       Petitioner’s request for section 6015 relief is dated

July 12, 2000.       It was received by respondent on July 17, 2000.

In her request, petitioner seeks only “equitable relief” from

income tax liabilities for the years 1995, 1996, and 1997.

Between the dates that petitioner’s request for section 6015

relief was submitted and October 2000, petitioner and her former

spouse filed a joint 1997 Federal income tax return.       The portion

of the unpaid income tax reported on the joint return closely

approximates petitioner’s then-outstanding income tax liability

resulting from her 1997 separate return.3      In a final notice,

dated April 9, 2003, respondent denied petitioner’s request for

relief for all 3 years.       Respondent’s determination was

reconsidered and upheld by respondent’s Appeals Office on

December 18, 2003, after the petition in this case was filed.



       3
        The parties have ignored the fact that at the time her
request for sec. 6015 relief was made, her 1997 income tax
liability did not result from a joint Federal income tax return,
see Raymond v. Commissioner, 119 T.C. 191, 195-197 (2002), and we
do likewise.
                                 - 7 -

Discussion

     In general, section 6013(a) allows spouses to elect to file

a joint Federal income tax return even though one has neither

income nor deductions.    Subject to various conditions and

limitations, the election is available even after an individual

return has been filed by one, or both of the spouses.    Sec.

6013(b).    If for any year spouses elect to file a joint return,

then each spouse is charged with the knowledge of the information

reported on the return, and each spouse is jointly and severally

liable for the entire tax due for that year.    Sec. 6013(d)(3);

Butler v. Commissioner, 114 T.C. at 282.

     Subject to various conditions and in a variety of ways, an

individual who has made a joint return may elect to seek relief

from the joint and several liability arising from that joint

return.    Sec. 6015.   In this case, petitioner seeks relief from

liabilities reported on the 1995, 1996, and 1997 joint returns

that she filed with her former spouse.    Consequently, she is

entitled to relief only as provided in section 6015(f), which

allows relief from joint and several liability if “it is

inequitable to hold the individual liable for any unpaid tax,”

and the individual is not entitled to relief under other

provisions of section 6015.    Sec. 6015(f)(1); Washington v.

Commissioner, 120 T.C. 137, 146-147 (2003).
                               - 8 -

     We review the Commissioner’s determination to deny section

6015(f) equitable relief using an abuse of discretion standard

and defer to the Commissioner’s determination unless it is

arbitrary, capricious, or without sound basis in fact.    Jonson v.

Commissioner, 118 T.C. 106, 125 (2002), affd. 353 F.3d 1181 (10th

Cir. 2003).   For each year here relevant, petitioner bears the

burden of proving that respondent’s denial of her request for

section 6015(f) relief is an abuse of discretion.   Washington v.

Commissioner, supra at 146; Jonson v. Commissioner, supra at 125.

     As required by section 6015(f), the Commissioner has

prescribed procedures and factors Internal Revenue Service

employees use to determine whether a spouse qualifies for relief

under that subsection.   At the time that petitioner requested

relief under section 6015(f), those procedures were set forth in

Rev. Proc. 2000-15, 2000-1 C.B. 447. (Subsequent modification of

these procedures by Rev. Proc. 2003-61, 2003-32 I.R.B. 296, does

not affect the resolution of this case.)

     Certain threshold conditions must be satisfied before the

Commissioner will consider a request for relief under section

6015(f).   See Rev. Proc. 2000-15, sec. 4.01, 2000-1 C.B. at 448.

Respondent agrees that petitioner satisfies these threshold

conditions for each year here under consideration, and we focus

our attention on other parts of the controlling revenue

procedure.
                               - 9 -

     Rev. Proc. 2000-15, sec. 4.02, 2000-1 C.B. at 448, describes

the circumstances under which the Commissioner will “ordinarily”

grant equitable relief in cases where a liability reported on a

joint return is unpaid.   These elements are:

          (a) At the time relief is requested, the
    requesting spouse is no longer married to, or is legally
    separated from, the nonrequesting spouse * * *;

          (b) At the time the return was signed, the
    requesting spouse had no knowledge or reason to know
    that the tax would not be paid. The requesting spouse
    must establish that it was reasonable for the requesting
    spouse to believe that the nonrequesting spouse would
    pay the reported liability. * * *; and

          (c) The requesting spouse will suffer economic
    hardship if relief is not granted. * * *

Rev. Proc. 2000-15, sec. 4.02(1), 2000-1 C.B. at 448.

     Respondent acknowledges that petitioner satisfies the first

requirement, but argues that petitioner does not qualify for

relief under sec. 4.02 of the revenue procedure because she:   (1)

Knew or had reason to know that the liabilities reported on the

joint returns for 1995 through 1997 would not be paid at the

times that she signed those returns; and (2) has not demonstrated

that she would suffer economic hardship if relief is not granted.

We agree with respondent on both points.

     Although petitioner did not participate in the family

farming operation, she was aware of the family’s financial

situation.   She was aware that her former spouse was having

trouble satisfying his then-current financial obligations when
                               - 10 -

she signed the 1995 and 1996 returns, and she certainly was aware

of her former spouse’s dire financial situation when she signed

the 1997 return.    The timing of the events strongly suggests that

the 1997 return was filed for the sole purpose of allowing her to

seek section 6015(f) relief from a Federal income tax liability

originally reported on a separate return.   As to her “economic

hardship,” we take into account, as did respondent, that she was

awarded substantial property in the divorce proceeding, and it

was her choice to expend some of the moneys received on expenses

other than her outstanding Federal income tax liabilities.     To

the extent that she experienced or is experiencing economic

hardship, that hardship is brought about more by her own

decisions than respondent’s refusal to grant section 6015(f)

relief.

     As in this case, if the requesting spouse satisfies the

threshold conditions of Rev. Proc. 2000-15, sec. 4.01, but does

not qualify for relief under Rev. Proc. 2000-15, sec. 4.02, the

Commissioner looks to Rev. Proc. 2000-15, sec. 4.03, 2000-1 C.B.

at 448, to determine whether the taxpayer should be granted

equitable relief.

     Section 4.03 of the revenue procedure provides a partial

list of positive and negative factors that the Commissioner is to

take into account when considering whether to grant an individual

full or partial equitable relief under section 6015(f).    As that
                              - 11 -

section makes clear, no single factor is to be determinative in

any particular case–-all factors are to be considered and weighed

appropriately, and the list of factors is not intended to be

exhaustive.   We see little point in listing and discussing each

factor set forth in section 4.03 of the revenue procedure.

Respondent has adequately done so in his supporting statement

denying petitioner’s request for section 6015(f) relief.

     Suffice it to say that respondent has considered each

and every one of the factors listed in section 4.03 of the

revenue procedure.   Although we might not entirely agree with

respondent’s conclusion with respect to each, we cannot say that

respondent’s determination to deny petitioner’s request for

section 6015(f) relief for any year in issue is an abuse of

discretion.

     Reviewed and adopted as the report of the Small Tax

Division.

     To reflect the foregoing,

                                           Decision will be

                                       entered for respondent.
