                   T.C. Summary Opinion 2008-14



                      UNITED STATES TAX COURT



          CIMBERLY CATHERINE CLARKE–LEWIS, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 18446-05S.            Filed February 11, 2008.



     Cimberly Catherine Clarke–Lewis, pro se.

     Chong S. Hong, for respondent.



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

the provisions of section 7463 of the Internal Revenue Code in

effect when the petition was filed.   Pursuant to section 7463(b),

the decision to be entered is not reviewable by any other court,

and this opinion shall not be treated as precedent for any other

case.   Unless otherwise indicated, subsequent section references
                              - 2 -

are to the Internal Revenue Code as amended, and all Rule

references are to the Tax Court Rules of Practice and Procedure.

     This case arises from a request for relief from joint and

several liability under section 6015(f) with respect to

petitioner’s unpaid joint tax liabilities for 1999 and 2000.    No

notices of deficiency were issued.    Petitioner requested relief

by filing Form 8857, Request for Innocent Spouse Relief (And

Separation of Liability and Equitable Relief).   The issues for

decision are whether petitioner is entitled to relief from joint

and several liability under section 6015(b), (c), or (f) for each

year.

                           Background

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

The stipulation of facts and the exhibits received into evidence

are incorporated herein by reference.   At the time the petition

was filed, petitioner resided in California.

     Petitioner is a high school graduate who has worked in real

estate and as a “personal banker” for Bank of America.

Petitioner married Masafumi Nakasu in 1991.    They started having

marital problems in 1998 after the birth of their second child.

Petitioner and Mr. Nakasu also started having financial troubles;

they filed for bankruptcy and received a discharge in April 1998.

     Petitioner and Mr. Nakasu filed joint Forms 1040, U.S.

Individual Income Tax Return, for 1999 and 2000.   The 1999
                                 - 3 -

Federal income tax return showed $9,021 as the “Amount You Owe”,

line 69, but there was no remittance of the tax.   The 2000

Federal income tax return showed $15,130 as the “Amount You Owe”,

line 69, but there was no remittance of the tax.   Petitioner and

Mr. Nakasu subsequently entered into an installment agreement

with the Internal Revenue Service (IRS) in September 2001 with

respect to their Federal income tax liabilities, and some

payments were made thereunder.

     In November 2001, petitioner separated from Mr. Nakasu.

Petitioner and Mr. Nakasu sold the marital home; the sale closed

on February 22, 2002.   The “Sellers Closing Statement” contains

petitioner’s handwritten directive to make the proceeds payable

to Mr. Nakasu.   Mr. Nakasu did not use the proceeds to pay their

Federal tax liabilities.

     Mr. Nakasu filed for divorce in March 2002; the divorce

became final that year.    He filed an offer-in-compromise (OIC) in

April 2002, which was rejected in July 2002.   In the interim,

petitioner and Mr. Nakasu signed a “Marital Settlement Agreement”

that specifically provided that Mr. Nakasu was to assume

responsibility for and pay their Federal tax liabilities.     In

July 2003, however, petitioner discovered that their Federal tax

liabilities were not paid when the IRS contacted her about its
                               - 4 -

proposed collection activities.    Petitioner filed for innocent

spouse relief in February 2004.1

     Respondent’s preliminary determination denied relief.     On

September 29, 2004, petitioner appealed by filing a Form 12509,

Statement of Disagreement.   On July 7, 2005, respondent issued

his final determination, sustaining the denial of relief under

section 6015(b), (c), and (f), concluding that petitioner was not

eligible for relief under those provisions.

     In the interim, Mr. Nakasu filed for bankruptcy.    The

Federal tax liabilities were discharged on April 7, 2005, with

respect to Mr. Nakasu.

                             Discussion

Burden of Proof

     Except as otherwise provided in section 6015, petitioner

bears the burden of proof with respect to her entitlement to

innocent spouse relief.   See Rule 142(a); Alt v. Commissioner,

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

2004).

Joint and Several Liability and Section 6015 Relief

     Section 6013(d)(3) provides that if a joint return is filed,

the tax is computed on the taxpayers’ aggregate income, and



     1
        Petitioner testified that she filed for relief in October
2003. The Form 12510, Questionnaire for Requesting, Spouse is
dated Oct. 30, 2003. But the Form 8857 is date stamped “RECEIVED
FEB 25 2004”.
                                 - 5 -

liability for the resulting tax is joint and several.       See also

sec. 1.6013-4(b), Income Tax Regs.       But the IRS may relieve a

taxpayer from joint and several liability under section 6015 in

certain circumstances.

Section 6015(b):     Full or Apportioned Relief

     Section 6015(b) provides full or apportioned relief for “an

understatement of tax”.     Sec. 6015(b)(1)(B) and (2).    Because

petitioner’s liabilities resulted from underpayments of the tax

shown due on petitioner’s joint returns, not understatements of

tax, petitioner does not qualify for relief under section

6015(b).    See Washington v. Commissioner, 120 T.C. 137, 146

(2003).    Accordingly, respondent’s determinations are sustained

to the extent that they deny relief under section 6015(b) for

each year.

Section 6015(c): Relief for Taxpayers No Longer Married, Legally
Separated, or Not Living Together

     Section 6015(c) provides relief from joint and several

liability for spouses who filed a joint return if they are no

longer married, are legally separated, or have lived apart for a

12-month period.     Section 6015(c)(1) provides proportionate

relief for “any deficiency which is assessed with respect to the

return”.    Relief is not available under section 6015(c) with

respect to an unpaid liability for the tax reported on the

return.    See id.
                                 - 6 -

     Petitioner does not qualify for relief under section 6015(c)

because there are no deficiencies.       Accordingly, respondent’s

determinations are sustained to the extent that they deny relief

under section 6015(c) for each year.

Section 6015(f):    Equitable Relief

     The IRS may relieve an individual from joint and several

liability under section 6015(f) if, taking into account all the

facts and circumstances, it is inequitable to hold the taxpayer

liable for any unpaid tax or deficiency and he does not qualify

for relief under section 6015(b) or (c).

     The Court reviews the IRS’s denial of relief under section

6015(f) for abuse of discretion.    See Butler v. Commissioner, 114

T.C. 276, 292 (2000).    Under the abuse of discretion standard,

the Court must determine whether the IRS exercised its discretion

arbitrarily, capriciously, or without sound basis in fact when it

denied relief.     Jonson v. Commissioner, 118 T.C. 106, 125 (2002),

affd. 353 F.3d 1181 (10th Cir. 2003).       The Court’s review is

limited, and the Court cannot substitute its judgment for that of

the IRS and determine whether in the Court’s opinion it would

have granted relief.    See Patton v. Commissioner, 116 T.C. 206

(2001).

     To guide IRS employees in exercising their discretion, the

Commissioner has issued revenue procedures that list the factors

they should consider; the Court also uses the factors when
                                 - 7 -

reviewing the IRS’s denial of relief.     See Washington v.

Commissioner, supra at 147-152; Rev. Proc. 2003-61, 2003-2 C.B.

296, modifying and superseding Rev. Proc. 2000-15, 2000-1 C.B.

447.

Rev. Proc. 2003-61, Sec. 4.01:    Seven Threshold Conditions for
Relief

       Rev. Proc. 2003-61, sec. 4.01, 2003-2 C.B. at 297, begins

with a list of seven threshold conditions that a taxpayer must

satisfy in order to qualify for equitable relief.     The Court will

not recite them.    Respondent concedes that petitioner satisfies

the threshold requirements for 1999.     The Court finds that

petitioner satisfies the threshold requirements with respect to

the items that are not attributable to her for 2000 as determined

by the Appeals officer handling the appeal.     To the extent that

the unpaid liability consists of items attributable to

petitioner, respondent did not abuse his discretion in denying

relief because she does not satisfy the requirement:     “the

liability from which the requesting spouse seeks relief is

attributable to an item” of the other spouse.     See Rev. Proc.

2003-61, sec. 4.01(7), 2003-2 C.B. at 297.

Rev. Proc. 2003-61, Sec. 4.02:    Circumstances Ordinarily Allowing
for Relief

       Where the requesting spouse satisfies the threshold

conditions of Rev. Proc. 2003-61, sec. 4.01, Rev. Proc. 2003-61,

sec. 4.02, 2003-2 C.B. at 298, sets forth the circumstances in
                                 - 8 -

which the IRS will ordinarily grant relief under section 6015(f)

with respect to an underpayment of a properly reported liability.

To qualify for relief under Rev. Proc. 2003-61, sec. 4.02, the

requesting spouse must:   (1) No longer be married to, be legally

separated from, or have not been a member of the same household

as the nonrequesting spouse at any time during the 12-month

period ending on the date of the request for relief; (2) have had

no knowledge or reason to know when she signed the return that

the nonrequesting spouse would not pay the tax liability; and (3)

suffer economic hardship if relief is not granted.     See Rev.

Proc. 2003-61, sec. 4.02(1), 2003-2 C.B. at 298.

     Petitioner was divorced from Mr. Nakasu when she requested

innocent spouse relief.   Condition 1 is satisfied.

     With respect to whether petitioner had knowledge or reason

to know when she signed the return that Mr. Nakasu would not pay

the tax liability, petitioner agrees that at the time she signed

each return she knew that payments for tax shown on each return

would not be made.   Accordingly, petitioner does not qualify for

relief under Rev. Proc. 2003-61, sec. 4.02, and the Court need

not discuss the third element.

Rev. Proc. 2003-61, Sec. 4.03:    Other Factors

     Where the requesting spouse fails to qualify for relief

under Rev. Proc. 2003-61, sec. 4.02, the IRS may nevertheless

grant relief under Rev. Proc. 2003-61, sec. 4.03.     Rev. Proc.
                               - 9 -

2003-61, sec. 4.03, 2003-2 C.B. at 298, contains a nonexhaustive

list of factors that the IRS will consider and weigh when

determining whether to grant equitable relief under section

6015(f).   The factors and the Court’s analysis with respect to

each factor are described below.

Marital Status

     The IRS will take into consideration whether the requesting

spouse is separated or divorced from the nonrequesting spouse.

Rev. Proc. 2003-61, sec. 4.03(2)(a)(i), 2003-2 C.B. at 298.

     Petitioner was divorced from Mr. Nakasu when she filed her

request.   This factor weighs in favor of relief.   See McKnight v.

Commissioner, T.C. Memo. 2006-155 (stating that divorce weighs in

favor of relief under Rev. Proc. 2003-61); see also Beatty v.

Commissioner, T.C. Memo. 2007-167 (stating that remaining married

or residing together is a neutral factor under Rev. Proc. 2003-

61); cf. Butner v. Commissioner, T.C. Memo. 2007-136 (stating

same under Rev. Proc. 2000-15).

Economic Hardship

     Petitioner contends that she is unable to pay the tax

liability because she has incurred substantial credit card debt

to cover their living expenses while her second husband was

unemployed on account of an illness.   Petitioner also testified

that she pulled the equity out of her homes to cover their
                               - 10 -

expenses, and she is working three jobs and “still not making

it.”

       The IRS will take into consideration whether the requesting

spouse will suffer economic hardship if relief is not granted.

Rev. Proc. 2003-61, sec. 4.03(2)(a)(ii), 2003-2 C.B. at 298.

Generally, economic hardship exists if collection of the tax

liability will cause the taxpayer to be unable to pay reasonable

basic living expenses.    Butner v. Commissioner, supra.

       In determining a reasonable amount for basic living

expenses, the Court considers, among other things:    (1) The

taxpayer’s age, employment status and history, ability to earn,

and number of dependents; (2) an amount reasonably necessary for

food, clothing, housing, medical expenses, transportation,

current tax payments, and expenses necessary to the taxpayer’s

production of income; (3) the cost of living in the taxpayer’s

geographic area; (4) the amount of property available to satisfy

the taxpayer’s expenses; (5) any extraordinary circumstances;

i.e., special education expenses, a medical catastrophe, or a

natural disaster; and (6) any other factor bearing on economic

hardship.    See sec. 301.6343-1(b)(4)(ii), Proced. & Admin. Regs.

Petitioner must prove that the expenses qualify and that they are

reasonable.    See Monsour v. Commissioner, T.C. Memo. 2004-190.
                               - 11 -

     The IRS has issued guidelines for allowable expenses, which

include necessary and conditional expenses.2   “Necessary expenses

are those that meet the necessary expense test; i.e., ‘they must

provide for a taxpayer’s and his or her family’s health and

welfare and/or the production of income’ and they must be

reasonable.”   Schulman v. Commissioner, T.C. Memo. 2002-129 n.6.

There are three types of necessary expenses:   (1) Those based on

national standards; i.e., food, housekeeping supplies, clothing,

and personal care products and services; (2) those based on local

standards; i.e., housing, utilities, and transportation; and (3)

other expenses, which are not based on national or local

standards.   Id.   Conditional expenses are allowable if the tax

liability, including projected accruals, can be fully paid within

5 years.   Id.; 2 Administration, Internal Revenue Manual (CCH),

sec. 5.15.1.10, at 17662, 17664.3   A conditional expense may also

be allowed for up to 1 year if it meets the necessary expense

test and the taxpayer is unable to pay the tax liability within 5

years.   Schulman v. Commissioner, supra; 2 Administration,

Internal Revenue Manual (CCH), sec. 5.15.1.10, at 17662, 17664.


     2
        The guidelines are published on the IRS’s Web site at
http://www.irs.gov/individuals/article/0,,id=96543,00.html (last
visited Nov. 21, 2007). The amount listed as the national or
local standard is effective as of Oct. 1, 2007.
     3
        As a general rule, provisions within the Internal Revenue
Manual are not binding on the IRS and convey no rights on
taxpayers. See First Fed. Sav. & Loan Association of Pittsburgh
v. Goldman, 644 F. Supp. 101, 103 (W.D.Pa. 1986).
                                   - 12 -

Secured and unsecured debts, i.e., credit card debt, are examples

of conditional expenses.        See Lemann v. Commissioner, T.C. Memo.

2006-37 n.12; 2 Administration, Internal Revenue Manual (CCH),

sec. 5.15.1.10, at 17662, 17664.

     Respondent’s “Appeals Case Memo” states only:            “Economic

Hardship.        Not in favor - RS has not demonstrated an economic

hardship.”

     Petitioner claimed on her Form 433-A, Collection Information

Statement for Wage Earners and Self-Employed Individuals,

expenditures that were not properly substantiated or were in

excess of the national or local standard.          Accordingly, the Court

will use the following amounts in its analysis of petitioner’s

claim of economic hardship:

                     Expenditure              Amount Allowed
                                               1
            Food, clothing, misc.               $1,331.00
                                                 1
            Housing and utilities                  2,239.00
                                                1
            Transportation                        1,344.00
                                                2
            Other “secured debt”                  2,095.94
            Other “unsecured debt”                   -0-
             1
                   Based on the national or local standard.
             2
                   Taxes, insurance, and first and second
                 mortgages on the rental property.

     Petitioner’s Form 433-A indicates that petitioner and her

second husband’s total monthly income is $6,050.          On her Form

433-A, petitioner claimed that her rental property’s current

value is $325,000 with encumbrances totaling $369,000.

Petitioner claimed $410,000 as the current value of her principal
                              - 13 -

residence with encumbrances totaling $408,000.   But petitioner’s

mortgage statements show that her principal residence is

encumbered only to the extent of $387,811.39, giving her

potential equity of $22,188.61.

     At trial, petitioner testified that a silent third party,

her parents, gave her the money to acquire the second home to

“share in the equity”, so they encumbered the residence to the

extent of $22,000.   But petitioner also testified that title to

the property was held in her name only, and she failed to offer

any evidence proving her parents’ interest, other than her self-

serving testimony.   Petitioner also did not offer any evidence of

the properties’ current values to support her valuations.

Substantiation of her parents’ interest and the properties’

values is crucial in view of the $22,188.61 in potential equity.4

     Additionally, it is difficult to find that the economic

hardship factor weighs in favor of relief in view of the fact

that petitioner used moneys received after her divorce to acquire

items with her second husband (i.e., new cars/second home) rather

than satisfying her Federal tax liabilities.    The Court is also

disturbed by the fact that petitioner has not sought repayment

from Mr. Nakasu for his alleged misappropriation of the proceeds

received from the sale of their marital home.


     4
        Although the rental property is currently rented with a
negative cashflow, there exists the possibility that the property
can be rented for profit or sold at a gain.
                               - 14 -

     On the basis of the foregoing and petitioner’s $21,228.67

net worth (i.e., $28,238.61 (income and potential equity) less

$7009.94 (total living expenses)), the Court finds that

petitioner has not shown that she will suffer economic hardship

if she is not relieved of the tax liability.   Consequently, this

factor weighs against granting relief.    See Banderas v.

Commissioner, T.C. Memo. 2007-129 (stating that lack of economic

hardship weighs against relief under Rev. Proc. 2003-61); cf.

Butner v. Commissioner, T.C. Memo. 2007-136 (same under Rev.

Proc. 2000-15).

Knowledge or Reason To Know

     The IRS will also consider whether the requesting spouse did

not know or had no reason to know that the nonrequesting spouse

would not pay the liability.   Rev. Proc. 2003-61, sec.

4.03(2)(a)(iii)(A), 2003-2 C.B. at 298.   In the case of a

reported but unpaid liability, the relevant knowledge is whether

the taxpayer knew or had reason to know when the return was

signed that the tax would not be paid.    See Washington v.

Commissioner, 120 T.C. at 151; see also Feldman v. Commissioner,

T.C. Memo. 2003-201, affd. 152 Fed. Appx. 622 (9th Cir. 2005).

Petitioner must establish that:   (1) At the time she signed the

return for each of the years at issue, she had no knowledge or

reason to know that the tax reported on each return would not be

paid; and (2) it was reasonable for her to believe that Mr.
                               - 15 -

Nakasu would pay the tax reported thereon.    See Ogonoski v.

Commissioner, T.C. Memo. 2004-52; Collier v. Commissioner, T.C.

Memo. 2002-144.

     Petitioner conceded that at the time she signed each return,

she knew that remittances for the tax reported thereon would not

be included.    In 1998, petitioner and Mr. Nakasu received a

discharge in bankruptcy.    Petitioner was aware of their financial

difficulties.    As a result, petitioner cannot establish that at

the time she signed each return it was reasonable for her to

believe that the tax would be paid or that she had no reason to

know that the tax reported thereon would not be paid.    See, e.g.,

Banderas v. Commissioner, supra.    This factor weighs against

relief.   See Beatty v. Commissioner, T.C. Memo. 2007-167

(applying Rev. Proc. 2003-61 and finding that knowledge or reason

to know weighs against relief); Fox v. Commissioner, T.C. Memo.

2006-22 (same); cf. Levy v. Commissioner, T.C. Memo. 2005-92

(applying Rev. Proc. 2000-15 and stating that lack of knowledge

weighs in favor of relief while knowledge or reason to know

weighs against relief).

Nonrequesting Spouse’s Legal Obligation

     The IRS will also consider whether the nonrequesting spouse

has a legal obligation to pay the outstanding income tax

liability pursuant to a divorce decree or agreement.    See Rev.

Proc. 2003-61, sec. 4.03(2)(a)(iv), 2003-2 C.B. at 298.     But if
                               - 16 -

the requesting spouse knew or had reason to know at the time the

agreement was entered into that the nonrequesting spouse would

not pay the liability, then this factor will not weigh in favor

of relief.   See id.

     The “Marital Settlement Agreement” provided that Mr. Nakasu

was to assume and pay the Federal tax liabilities.    There is no

evidence that petitioner knew at the time they entered into the

“Marital Settlement Agreement” in 2002 that Mr. Nakasu would not

pay the Federal tax liabilities.    But the Court finds that

petitioner had reason to know at the time they entered into the

agreement that Mr. Nakasu would not pay the Federal tax

liabilities.   Petitioner testified that she was the one who “made

the call to enter into the installment agreement” in 2001 because

she believed that Mr. Nakasu had a pattern of not paying his

debts due to his procrastination.    This factor is neutral.   Id.;

see also Magee v. Commissioner, T.C. Memo. 2005-263 (applying

Rev. Proc. 2003-61); cf. Billings v. Commissioner, T.C. Memo.

2007-234 (applying Rev. Proc. 2000-15).

Significant Benefit

     The IRS will consider whether the requesting spouse received

any significant benefit beyond normal support as a result of the

unpaid income tax liability.   See Rev. Proc. 2003-61, sec.

4.03(2)(a)(v), 2003-2 C.B. at 299.
                                - 17 -

     Respondent represents that there is significant benefit

beyond normal support due to the unpaid tax liabilities; i.e.,

the failure to pay the tax “resulted in significant additional

income.”

     The significant benefit factor probes whether the requesting

spouse received, directly or indirectly, from the assets or

income resulting from the unpaid tax liability any benefit in

excess of normal support.   Sec. 1.6015-2(d), Income Tax Regs.;

Rev. Proc. 2003-61, sec. 4.03(2)(a)(v), 2003-2 C.B. at 299

(citing section 1.6015-2(d), Income Tax Regs.).   In determining

whether the requesting spouse significantly benefited from the

unpaid tax liabilities, the Court considers whether the

requesting and nonrequesting spouses were able to make

expenditures that they would not have been able to make

otherwise.   See Levy v. Commissioner, supra (and cases cited

therein).    Additionally, evidence of a significant benefit “may

consist of transfers of property or rights to property, including

transfers that may be received several years” later.   Sec.

1.6015-2(d), Income Tax Regs.

     There is nothing in the record regarding petitioner’s and

Mr. Nakasu’s lifestyle or spending habits during their marriage

or any other evidence indicating that petitioner received any

significant benefit from the unpaid Federal tax liabilities.

Therefore, the Court concludes that this factor weighs in favor
                              - 18 -

of relief.   See Magee v. Commissioner, supra (stating that lack

of significant benefit weighed in favor of relief under Rev.

Proc. 2003-61); cf. Butner v. Commissioner, supra (stating that

lack of significant benefit weighed in favor of relief under

former section 6013(e) notwithstanding that Rev. Proc. 2000-15

stated that it was neutral); Ferrarese v. Commissioner, T.C.

Memo. 2002-249.

Compliance With Federal Tax Laws

     The IRS will take into consideration whether the requesting

spouse had made a good faith effort to comply with Federal tax

laws in succeeding years.   See Rev. Proc. 2003-61, sec.

4.03(2)(a)(vi), 2003-2 C.B. at 299.

     Petitioner and Mr. Nakasu received an extension until August

15, 2002, to file their 2001 joint Federal income tax return; the

IRS received the return on November 27, 2002.   Petitioner

testified that she believed that Mr. Nakasu “forged” her name on

that return.   Petitioner has not otherwise renounced the joint

return or filed a separate return for that year.

     Petitioner’s 2002 return was timely filed and showed an

overpayment that was applied to 2000.

     Petitioner received an extension to file her 2003 return

until October 15, 2004; however, she filed the return late and

without remittance of the tax on March 3, 2005.    At trial,

petitioner testified that she did not timely file because the
                               - 19 -

certified public accountant (C.P.A.) she hired to prepare her

request for innocent spouse relief advised her not to file and to

seek an extension until the IRS issued its determination.      At

trial, however, petitioner testified that she went to the

C.P.A.’s office on April 15, 2004, to sign her return, she told

him to file her return notwithstanding his advice, and he claimed

that he could not prepare her return because he did not have all

of the paperwork.    Petitioner made a series of partial payments

and subsequently requested an abatement of the penalties and

interest, which the IRS granted, and the resulting overpayment

was refunded.

     Petitioner received an extension to file her 2004 return

until August 15, 2005.    Petitioner filed her return on April 18,

2005; however, she did not submit a remittance of the tax until

June 3, 2005.    Petitioner testified that she did not have the

money to pay the tax timely, but she paid it as soon as she

could.

     Petitioner and her second husband timely filed and received

a refund for 2005.

     The Court finds that petitioner has not complied with

Federal tax laws despite the two timely filed returns in 2002 and

2005.    Petitioner would not have filed in 2001 but for the

allegedly forged return filed by Mr. Nakasu.    Petitioner did not

establish that she had reasonable cause for failing to timely pay
                              - 20 -

her 2004 tax liability since the IRS assessed the penalty,

petitioner paid the penalty, and the penalty was not otherwise

abated by the IRS.   See, e.g., sec. 301.6651-1(c), Proced. &

Admin. Regs. (discussing a reasonable cause defense that the

taxpayer may raise with the IRS if he establishes, among other

things, that he was unable to pay the liability or would suffer

undue hardship if he paid the liability on the due date).

Finally, despite the fact that the IRS abated the interest and

penalties with respect to the 2003 return, the Court does not

find credible petitioner’s testimony as to her excuse for not

filing timely, given that the cover letter addressed to

petitioner from the C.P.A. states:

     Enclosed is your 2003 Federal Individual Income Tax
     Return. * * * There is a balance due of $2,778. Make
     your check payable to the ‘United States Treasury’ and
     mail your Federal return with Form 1040-V payment
     voucher on or before October 15, 2004 * * *.

     Therefore, the Court finds that the compliance factor weighs

against relief.   See Fox v. Commissioner, T.C. Memo. 2006-22

(stating noncompliance weighs against relief under Rev. Proc.

2003-61); Beatty v. Commissioner, T.C. Memo. 2007-167 (stating

that one delinquently filed return, which showed a refund due,

and the other facts and circumstances were not significant

factors weighing against relief in that case, and the

Commissioner argued that the compliance factor weighed in favor

of relief under Rev. Proc. 2003-61); cf. Butner v. Commissioner,
                                - 21 -

T.C. Memo. 2007-136 (stating that noncompliance weighs against

relief under Rev. Proc. 2000-15).

Abuse

        The IRS will also consider whether the nonrequesting spouse

abused the requesting spouse.     See Rev. Proc. 2003-61, sec.

4.03(2)(b)(i), 2003-2 C.B. at 299.       The presence of abuse is a

factor favoring relief, and a history of abuse may mitigate the

requesting spouse’s knowledge or reason to know.       Id.

        Petitioner did not claim on her Form 8857 or on her Form

12510 that she was abused.     In a letter dated February 6, 2004,

petitioner stated that by the end of 2001, Mr. Nakasu had “gotten

involved * * * [in swinging].     He manipulated and threatened me

so I went along with it for one month.”       In her Form 12509,

petitioner stated that after their house sold in 2002, she asked

Mr. Nakasu if the taxes were paid, and he would curse and

threaten her just for asking.     Petitioner further stated that Mr.

Nakasu manipulated her, that she was afraid of him, and that he

threatened to take the children away from her.       Petitioner also

claimed that after the IRS contacted her in 2003 about the unpaid

liability, she questioned Mr. Nakasu about the unpaid taxes, and

he called Child Protective Services on her.       At trial, petitioner

testified that she was not physically abused, but rather, she was

verbally abused.
                                - 22 -

     Petitioner’s claim of abuse is self-serving, and she points

to no specific incidents or threats at or near the time she

signed the return.    See In re Hinckley, 256 Bankr. 814 (Bankr.

M.D. Fla. 2000) (stating that abuse at that time is a significant

factor); see also Collier v. Commissioner, T.C. Memo. 2002-144

(stating that the Court would not rely on the lay witness’s

opinion regarding the taxpayer’s alleged verbal and mental abuse

because the Court found it to be conclusory and lacking in

specificity as to the facts).    Putting aside the “name calling”

and other remarks, petitioner’s allegations of abuse involve

periods after she signed the return and, therefore, do not weigh

in favor of relief.    See, e.g., Krasner v. Commissioner, T.C.

Memo. 2006-31 (stating that the police reports submitted to

verify the taxpayer’s claim of abuse were unsupportive because

they dated to a period after the taxpayer signed the return).

The Court does not find that the “name calling” and other remarks

were of such magnitude as to warrant weighing in favor of relief.

See Ogonoski v. Commissioner, T.C. Memo. 2004-52 (stating that

the abuse factor is neutral where there is no evidence of

physical or mental abuse “in any sense to which the tax law or

common experience will accord any recognition”).

     Finally, there is nothing in the record, other than

petitioner’s self-serving statements, that corroborates the

alleged abuse.   See Baumann v. Commissioner, T.C. Memo. 2005-31
                                - 23 -

(stating that the taxpayer had produced third-party records

confirming her abuse allegations); Fox v. Commissioner, supra

(stating same).

     The Court finds that this factor is neutral.   See Rev. Proc.

2003-61, sec. 4.03(2)(b)(i), 2003-2 C.B. at 299 (stating that the

presence of abuse weighs in favor of relief while lack of abuse

does not weigh against relief); see also Magee v. Commissioner,

T.C. Memo. 2005-263 (stating that lack of abuse is a neutral

factor under Rev. Proc. 2003-61); cf. Butner v. Commissioner,

supra (stating same under Rev. Proc. 2000-15).

Mental or Physical Health

     The IRS will take into consideration whether the requesting

spouse was in poor mental or physical health on the date the

requesting spouse signed the return or at the time relief was

requested.    See Rev. Proc. 2003-61, sec. 4.03(2)(b)(ii), 2003-2

C.B. at 299.

     There is no evidence in the record that petitioner’s mental

or physical health was poor; therefore, this is a neutral factor.

See id.; see also Magee v. Commissioner, supra.

Conclusion:    Weight of the Factors

     Although the decision is close, the Court concludes that the

Appeals officer did not act arbitrarily, capriciously, or without

sound basis in fact, nor is there anything “fundamentally wrong”

with the IRS’s determination.    See Johnson v. J.B. Hunt Transp.,
                             - 24 -

Inc., 280 F.3d 1125, 1131 (2002).    Consequently, respondent’s

denial of relief was not an abuse of discretion, and it is not

inequitable to hold petitioner liable for the unpaid taxes.

     To reflect the foregoing,


                                      Decision will be entered for

                                 respondent.
