                  T.C. Summary Opinion 2009-75



                     UNITED STATES TAX COURT



         LILLIAN DOREEN VILLELA-WILCOX, Petitioner, AND
                 DAVID J. WILCOX, Intervenor v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 11479-07S.               Filed May 13, 2009.



     Lillian Doreen Villela-Wilcox, pro se.

     David J. Wilcox, pro se.

     Daniel W. Layton, for respondent.



     CARLUZZO, Special Trial Judge:   This case was heard

pursuant to the provisions of section 7463.1   Pursuant to section



     1
      Unless otherwise noted, section references are to the
Internal Revenue Code of 1986, as amended, in effect for the
relevant period. Rule references are to the Tax Court Rules of
Practice and Procedure.
                                - 2 -

7463(b), the decision to be entered is not reviewable by any

other court, and this opinion shall not be cited as precedent for

any other case.

     In a final notice of determination dated April 12, 2007,

respondent denied petitioner’s claim for section 6015 relief with

respect to her joint and several liability arising from the 2000

joint Federal income tax return she filed with intervenor (the

return).   According to that notice, relief was denied because

petitioner “knew, or had reason to know, of the income or

deductions that caused the additional tax”.   In a timely petition

filed May 22, 2007, petitioner challenges respondent’s

determination.    Respondent now concedes petitioner’s entitlement

to relief under section 6015(c).   Intervenor is opposed to

allowing petitioner any relief under section 6015.   Petitioner’s

entitlement to section 6015 relief depends, in large part, upon

what she “knew” or had “reason to know” at the time she signed

the return, and we focus our attention on those points.

                             Background

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

the time the petition was filed, petitioner resided in

California, and intervenor resided in Colorado.

     Petitioner and intervenor were married February 14, 1997.

Several months later, in September, intervenor, in his own name

and with financing through a mortgage, purchased a house (the
                                - 3 -

marital residence).   Apparently petitioner’s credit rating at the

time precluded her participation in the acquisition of the

marital residence.    Nevertheless, by quitclaim deed executed by

intervenor after he acquired his interest in the marital

residence, she was made a joint tenant.

     Petitioner and intervenor separated in 2002 and were

divorced in 2006.    During the course of their marriage they filed

joint Federal income tax returns for the years 1997 through 2001.

The 1997 Joint Federal Income Tax Return

     Events that occurred during 1997 are relevant to the relief

petitioner seeks.    During 1997 petitioner and intervenor attended

what was promoted as a “financial planning seminar” in Montego

Bay, Jamaica, conducted by Anderson Ark & Associates (Anderson

Ark).   In fact the purpose and scope of the seminar was to market

interests in partnerships designed to reduce a partner’s income

tax liability through illegitimate means.   Intervenor bought into

a newly formed general partnership called GALEED Management,

which was organized and domiciled in Grand Turk, Turks and Caicos

Islands (GALEED).    Although not technically a partner in GALEED,

petitioner was designated its “agent”.

     Petitioner and intervenor’s 1997 joint Federal income tax

return (the 1997 return) was prepared by an affiliate of Anderson

Ark and mailed to them.   Both of them reviewed and signed it.

The 1997 return includes a Schedule E, Supplemental Income and
                                - 4 -

Loss, showing a substantial loss attributable to GALEED.       The

loss eliminated what would otherwise have been their Federal

income tax liability for that year (excluding the Schedule E

loss, the 1997 return shows over $200,000 in income) and resulted

in a $42,536 income tax refund, a portion of which was used to

make a cash purchase of a new Cadillac.

The 2000 Federal Income Tax Return

       During 2000 intervenor purchased an interest in Forth

Venture, L.L.C. (Venture), another entity promoted by Anderson

Ark.    Intervenor’s decision to acquire that interest was prompted

by a comparison of two “mock” 2000 joint Federal income tax

returns, each prepared by an affiliate of Anderson Ark.     One

return projected a $29,421 joint income tax liability of

petitioner and intervenor if the purchase was not made, and the

other projected an income tax refund of $28,800, if the

partnership interest was acquired.      The cost of the partnership

interest was $21,000.

       In order to finance intervenor’s purchase of an interest in

Venture, the marital residence had to be refinanced.     The

refinancing was made more complicated because petitioner,

although shown to be a joint tenant on the quitclaim deed

executed years before, was not liable on the note secured by the

original mortgage.    Consequently, in a prearranged series of

events, petitioner reconveyed her interest in the marital
                                 - 5 -

residence to intervenor, intervenor refinanced the marital

residence in his own name, and, once again by quitclaim deed,

petitioner’s joint tenancy in the martial residence was restored.

Petitioner recalls the series of events described above in

connection with the refinancing of the marital residence but

conveniently claims to have no recollection of the reasons for

doing so.

     As it turned out and as with 1997, the return was prepared

by an affiliate of Anderson Ark and includes a Schedule E.   That

schedule shows a $356,250 loss attributable to Venture.   As a

result the return shows no taxable income (excluding the Schedule

E loss, the return shows over $160,000 in income), no income tax

liability, a $28,800 overpayment of income tax, and a refund

claim for that amount.   By the time the return was filed,

however, respondent apparently was on to Anderson Ark promotions,

and there is some question in the record whether petitioner and

intervenor ever received the refund.

Respondent’s Examination of Venture for 2000

     As a result of an examination conducted in accordance with

the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA),

Pub. L. 97-248, 96 Stat. 324, administrative adjustments were

made to Venture’s 2000 return.    Following Venture’s examination

petitioner and intervenor, each received a Notice of Final

Partnership Administrative Adjustment (FPAA), one issued on May
                               - 6 -

16, 2005, and the other on June 20, 2005.   Neither petitioner nor

intervenor filed a petition in this Court with respect to the

FPAAs.   The administrative adjustments made to Venture caused a

computational adjustment (increase) to petitioner and

intervenor’s 2000 joint Federal income tax liability of more than

$75,000 for 2000, and in due course, that increase was assessed.

The Notice of Deficiency for 2000

     On May 22, 2006, after the dust from the TEFRA procedures

settled, petitioner and intervenor were issued what is commonly

referred to as an affected items notice of deficiency for 2000.

In that notice respondent imposed a $6,190 section 6662(a)

accuracy-related penalty computed with reference to the

additional tax liability assessed as a result of the disallowance

of the Venture loss deduction claimed on the return.    Neither

petitioner nor intervenor filed a petition with this Court

challenging the imposition of that penalty, and that penalty,

along with related amounts, was assessed in due course.

Petitioner’s Request for Section 6015 Relief

     In a Form 8857, Request for Innocent Spouse Relief, received

by respondent on October 1, 2006, petitioner requested relief

from the portion of her 2000 joint Federal income tax liability

that remained unpaid as of that date.   In a final notice of

determination, dated April 12, 2007, respondent determined that

she was not entitled to the relief requested.
                                 - 7 -

     As noted, respondent now concedes that petitioner is

entitled to relief under section 6015(c).    Respondent and

petitioner have proceeded as though respondent’s concession

renders moot petitioner’s request for relief under section

6015(b) and (f), and we do likewise, focusing our attention

solely on petitioner’s entitlement to relief under section

6015(c).

                           Discussion

     In general, spouses who elect to file a joint Federal income

tax return for the taxable year are jointly and severally liable

for the entire amount of tax reported on the return, as well as

for the liability for any deficiency subsequently determined,

even if all of the income giving rise to the tax liability is

allocable to only one of them.    Sec. 6013(d)(3); Butler v.

Commissioner, 114 T.C. 276, 282 (2000).     “Section 6015, however,

provides various means by which a spouse can be relieved of this

joint and several obligation.”     Alt v. Commissioner, 119 T.C.

306, 311 (2002), affd. 101 Fed. Appx. 34 (6th Cir. 2004).

     One means is provided in section 6015(c).    Upon election of

its application by the taxpayer, that section limits a spouse’s

liability for a deficiency to the portion of the deficiency

properly allocable to that spouse under section 6015(d).      In

general, an item that gives rise to a deficiency on a joint

Federal income tax return will be allocated to the individuals
                                - 8 -

who file the joint return in the same manner as that item would

have been allocated had those individuals filed separate returns.

Sec. 6015(d)(3)(A).   As noted, respondent now concedes

petitioner’s entitlement to relief under section 6015(c); this

concession presumably contemplates a section 6015(d) allocation

satisfactory to both of them.   Separate and apart from any such

allocation, intervenor challenges petitioner’s entitlement to

section 6015(c) relief.

     According to intervenor, petitioner knew about the item

giving rise to the 2000 deficiency, that is, the deduction for

the loss from Venture, and that knowledge disqualifies her from

section 6015(c) relief.   The evidence overwhelmingly would

support a finding that petitioner had “reason to know” about the

understatement of tax shown on the return.   See, e.g., Price v.

Commissioner, 887 F.2d 959 (9th Cir. 1989); King v. Commissioner,

116 T.C. 198, 204 (2001); Wiener v. Commissioner, T.C. Memo.

2008-230; Levin v. Commissioner, T.C. Memo. 1987-67.      But a

requesting spouse’s “reason to know” of the item is not

sufficient to deny relief under section 6015(c).   If, as here,

all of the other requirements of that section have been

satisfied, then, as relevant here, relief is denied to the

requesting spouse only if the Commissioner “demonstrates that

* * * [the requesting spouse] had actual knowledge, at the time

such individual signed the return, of any item giving rise to a
                                   - 9 -

deficiency”.       Sec. 6015(c)(3)(C); Charlton v. Commissioner, 114

T.C. 333, 341 (2000); Martin v. Commissioner, T.C. Memo. 2000-

346.       Normally, the “burden of proof” on the point rests with the

Commissioner.       Here, it would seem that respondent’s burden has

been rendered moot by respondent’s concession.2      The question to

be addressed, then, is what becomes of the evidence of

petitioner’s “actual” knowledge offered by intervenor.

       Although the situation seldom occurs in this Court, we

recognize that the burden of proof placed on one party can be

satisfied by evidence offered by that party’s adversary.

See e.g., Bogk v. Gassert, 149 U.S. 17, 23 (1893) (“It not

infrequently happens that the defendant himself, by his own

evidence, supplies the missing link.”); United States v. Brown,

53 F.3d 312, 314 (11th Cir. 1995) (“[A] defendant who chooses to

present a defense runs a substantial risk of bolstering the

Government’s case.”); United States v. Ortiz-Rengifo, 832 F.2d

722, 726 (2d Cir. 1987) (“[W]e may look to the defendant’s own

evidence to determine so fundamental a matter as whether there

was proof of all the elements of the crime charged.”).       Under

appropriate circumstances, we would not be reluctant to deny

section 6015(c) relief to a requesting spouse if evidence offered


       2
      The existence of the settlement agreement between
petitioner and respondent has appropriately been called to the
Court’s attention. The specific terms and conditions of the
agreement between them, appropriately, has not. See Fed. R.
Evid. 408.
                              - 10 -

by an intervenor, rather than the Commissioner, demonstrated that

such relief was unavailable because of the requesting spouse’s

“actual knowledge” of “the item giving rise to the deficiency”.

     Other than matters stipulated, which do not in and of

themselves satisfy the burden contemplated by section

6015(c)(3)(C), respondent offered no evidence at trial.

Petitioner and intervenor each testified on his or her own

behalf, and numerous documents were introduced into evidence on

intervenor’s behalf.   On balance, we find intervenor to be the

more credible witness.   Intervenor’s evidence shows petitioner’s

connection and involvement with intervenor’s participation in

Anderson Ark promotions over the years, including the year in

issue.   As it relates to petitioner’s “actual” knowledge,

intervenor’s evidence is persuasive, but it is not so compelling

to require that the settlement between respondent and petitioner

be disregarded.

     After careful review of all of the evidence we find that

petitioner is entitled to relief under section 6015, but only

pursuant to section 6015(c), and only as agreed between her and

respondent.

     To give effect to that agreement, and to otherwise reflect

the foregoing,


                                    Decision will be entered

                               under Rule 155.
