                       T.C. Memo. 2005-92



                     UNITED STATES TAX COURT



                JOAN PHYLLIS LEVY, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 12846-02.                Filed April 26, 2005.



     James S. Caris, for petitioner.

     Timothy R. Maher, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     GERBER, Chief Judge:   This case arises from petitioner’s

request for relief from joint and several liability under section

6015 for 1979, 1991, 1992, 1993, 1994, 1995, 1996, 1997, 1998,
                               - 2 -

and 1999.1   The issues for decision are:    (1) whether petitioner

is entitled to relief under section 6015(b) or (c) with respect

to 1979; and (2) whether respondent abused his discretion in

denying petitioner relief under section 6015(f) with respect to

each of petitioner’s taxable years 1979, 1991, 1992, 1993, 1994,

1995, 1996, 1997, 1998, and 1999.

                         FINDINGS OF FACT2

A.   Background

      At the time her petition was filed petitioner resided in

Miami-Dade County, Florida.   Petitioner received a bachelor of

arts degree in elementary education in 1969.     Shortly after

obtaining her bachelor’s degree, petitioner worked as a

substitute teacher for approximately a year.

      Petitioner and her former husband, Dr. Mitchell Levy (Levy),

married during 1974.   Petitioner and Levy had three children




      1
       References to sec. 6015 are to that section as added to
the Internal Revenue Code by the Internal Revenue Service
Restructuring and Reform Act of 1998, Pub. L. 105-206, sec. 3201,
112 Stat. 734. Sec. 6015 generally applies to any liability for
tax arising after July 22, 1998, and any liability for tax
arising on or before July 22, 1998, that remains unpaid as of
such date. See Cheshire v. Commissioner, 115 T.C. 183, 189
(2000), affd. 282 F.3d 326 (5th Cir. 2002); H. Conf. Rept. 105-
599, at 251 (1998), 1998-3 C.B. 747, 1005. All other section
references, unless otherwise indicated, are to the Internal
Revenue Code in effect for the years in issue.
      2
       Some of the facts have been stipulated and are found
accordingly.
                                - 3 -

during their marriage:    Nicole (who was born in 1975), Michael

(who was born in 1978), and Alexis (who was born in 1980).

     Levy is an oncological surgeon.     During the period relevant

to this case, he practiced medicine in Broward County, Florida.

Since 1977, he has been a solo practitioner and has managed his

own medical business.

     From 1974 until 1999, petitioner was a full-time homemaker

and did not work outside the home.      Petitioner and Levy separated

in 1994.   They were divorced on June 13, 2002.    From the time of

their separation in 1994 through the time of the trial in this

case, they maintained separate households and have lived apart

from one another.   In 1994, petitioner and Levy each moved out of

their two-bedroom condominium unit in Key Biscayne, Florida,

which had been their marital home (the Key Biscayne condominium).

In 1996, petitioner and her children moved back into the Key

Biscayne condominium.    Since 1994, Levy has lived at various

other locations in the Miami area.

     In 1999, petitioner became a real estate agent for a realty

firm.   This was her first paying job in approximately 25 years.

She earned $2,149 from her work as a real estate agent for that

year.

     Levy did not discuss his medical business or his financial

dealings with petitioner.    Petitioner did not know what amount of

money Levy had on deposit in his personal banking account.     From
                               - 4 -

1974 until their separation in 1994, Levy exercised complete

control over their household expenditures and the money that

petitioner spent.   Levy would handle and pay all of their

family’s household bills, and he would give petitioner cash to

pay for food, clothing, and other miscellaneous items.

Petitioner did not have a credit card until 1999.

     Levy continued to maintain substantial control over

petitioner’s household expenditures from 1994 (when petitioner

and he separated and began maintaining separate households)

through at least 2002 when they were divorced.    From 1994 through

2001, Levy would handle and pay all of petitioner’s major

household bills, including the Key Biscayne condominium’s monthly

mortgage, condo fee, and utilities, as well as the lease payments

and insurance on the car that petitioner drove.    Petitioner and

Levy’s three children lived with petitioner prior to the time

they began college, during summers while they were in college,

and occasionally after their graduation from college.    To enable

petitioner to pay for her and their children’s other living

expenses, such as food, clothing, recreation, etc., Levy provided

petitioner with a stipend on an as-needed basis.    He would either

give petitioner cash or draw her a check to deposit into the

checking account she maintained.

     Levy paid for the college tuitions of their three children.

Nicole attended and graduated from Emory University; Michael
                               - 5 -

attended and graduated from Tulane University; Alexis attended

and graduated from Northeastern University.    Nicole and Michael

also each had the use of a car while attending college.    Levy

paid for the acquisition cost, insurance, and maintenance of the

cars used by Nicole and Michael.

      From 1974 through the time of the trial in this case,

petitioner did not enjoy a lavish lifestyle.    During their

marriage, Levy did not give her expensive gifts or jewelry.

Petitioner did not buy lavish household furnishings or clothes.

During this time she and her family did not take trips abroad.

Most of the vacations she and her family took were visits to

family in Margate, Florida, and in New York State.

      For a number of years, Levy had a serious gambling problem.

Although petitioner knew that Levy gambled on occasion, she did

not know of the extent and seriousness of his problem until

around 2001.

B.   The 1979 Deficiency

      On April 15, 1980, petitioner and Levy jointly filed a Form

1040, U.S. Individual Income Tax Return, for 1979 that was

prepared by an accountant employed by Levy.    Petitioner signed

the return, but she had no involvement in the preparation of the

return.   No discussions took place between petitioner and Levy

about the preparation of the 1979 joint return.    The 1979 joint

return reflected adjusted gross income of $26,827.66, taxable
                                  - 6 -

income of $4,175.00, tax due of $109.00, and withholding credits

of $15,118.79.

     Subsequently, respondent examined and proposed an adjustment

to the 1979 joint return.      Petitioner and Levy agreed to that

adjustment.    Form 4340, Certificate of Assessments, Payments, and

Other Specified Matters (Form 4340), dated September 3, 2003,

indicates that on October 10, 1988, respondent assessed 1979

income tax deficiency in the amount of $26,520.00, plus

$31,968.36 in interest.      Form 4340 also indicates several future

levies and notices to levy dated between 1997 and 2001.

     On May 22, 1997, petitioner and Levy executed a Form 900,

Tax Collection Waiver, extending the period of limitations for

collection of their 1979 tax liability until December 31, 2003.

The Form 900 Waiver reflected that petitioner and Levy had an

unpaid 1979 tax liability of $49,147.52 as of May 22, 1997.

     Form 4340 lists, in pertinent part, the following actions

with respect to petitioner and Levy’s 1979 taxable year:

                              Assessment,     Payment,      Assessment
           Explanation of    Other Debits      Credit       Date(23C
  Date      transaction       (Reversal)     (Reversal)      RAC 006)

 4-15-80    Return filed &         --            $109.00    5-12-80
            tax assessed

 4-15-80    Withholding &          --          15,118.79       --
            excess FICA

 4-15-80    Overpayment            –-         (10,000.00)      --
            credit elect
            transferred to
            next tax pd.
                                - 7 -

5-12-80   Refund                 --        (5,009.79)     --

          Additional tax      $26,520.00       --       10-10-88
          assessed by
          examination
          prior to 30 day
          or 60 day ltr.

4-15-82   Overpayment            --         9,367.00      --
          credit applied
          1040 198812

          Interest assessed    31,968.36       --       10-10-88

4-26-89   Federal tax lien       --            --         --

4-15-89   Overpayment            --            22.00      --
          credit applied
          1040 198812

5-11-90   Subsequent pmt.        --         3,371.03      --

5-11-90   Dishonored             --        (3,371.03)     --
          subsequent pmt.

          Dishonored check         67.42       --       6-25-90
          penalty 199024

9-24-90   Fees and collec-         16.00       --         --
          tion costs

10-1-90   Fees and collec-         12.00       --         --
          tion costs

1-1-91    Federal tax lien         –          --         --

9-12-94   Fees and collec-         12.00
          tion costs

9-19-94   Fees and collec-         32.00       --         --
          tion costs

3-7-97    Subsequent pmt.          –          91.26      --
          levy

3-26-97   Subsequent pmt.          –         972.39      --
          misc. pmt.
                              - 8 -

 4-10-97   Subsequent pmt.     –        113.98    --
           levy

 4-10-97   Subsequent pmt.     --      5,000.00     --
           levy

 4-21-97   Overpayment         --          9.02     –-
           credit applied
           198612

 5-22-97   Collection sta-     --         --        --
           tute extension
           to 12-31-03

 11-6-98   Federal tax lien    --         --        --

11-30-98   Fees and collec-    32.00      --        --
           tion costs

 6-26-00   Subsequent pmt.     --      1,507.85     --
           levy

 1-23-01   Subsequent pmt.     --        431.25     --
           levy

 2-8-01    Intent to levy      --         --        --
           collection due
           process notice
           levy notice
           issued

  2-8-01   Intent to levy      --         --        --
           collection due
           process notice
           levy notice
           issued

 2-12-01   Intent to levy      --         --        --
           collection due
           process notice
           return receipt
           signed

 2-12-01   Intent to levy      --         --        --
           collection due
           process notice
           return receipt
           signed
                                     - 9 -

 6-26-01    Subsequent pmt.               --                  694.96                   --
            levy

 7-26-01    Subsequent pmt.               --                     15.03                 --
            levy

 7-26-01    Subsequent pmt.               --                     15.03                 --
            levy

 7-30-02    Subsequent pmt.               --                1,924.26                   --
            levy

 8-23-02    Bankruptcy suit               --                     --                    --
            pending1

 12-2-02    Bankruptcy suit               --                     --                    --
            no longer
            pending
      1
       As discussed more fully infra, the 8-23-02 entry reflects
the bankruptcy suit filed by Levy, which was subsequently
discharged on Dec. 2, 2002.

C.   The 1991 Through 1999 Tax Liabilities

      Petitioner and Levy filed joint returns for 1991, 1992,

1993, 1994, 1995, 1996, 1997, 1998, and 1999.                    As to each of

these returns, the return due date, the date upon which that

return was filed, and the total income, taxable income, and

balance due that petitioner and Levy reported, are as follows:

                                  Reported

 Year     Due date   Date filed   Total income   Taxable income       Balance due
                                      1                1              1
 1991     10-15-92   11-5-92           –                –                $10,247

 1992     10-15-93   8-15-95       $24,662                   0                11,123

 1993     10-15-94   8-15-95       249,326        $220,312                    78,752

 1994     8-15-95    8-15-95       547,865         539,426                    67,892

 1995     10-15-96   2-11-97       109,535             83,943                 19,435
                                      2            2                      2
 1996     10-15-97   11-25-98             –         105,291                26,229
                                  - 10 -
 1997     10-15-98   11-25-98   109,797         85,362        19,712

 1998     8-15-99    2-11-00    107,293         80,099        17,684

 1999     10-15-00   8-29-00    137,411        106,912        25,632
 1
  The parties have been unable to locate a copy of the 1991 return. Records
 that respondent maintained in the ordinary course of business reflect that
 petitioner and Levy reported having an adjusted gross income of $4,539, a
 self-employment tax liability of $10,247, and tax due of $10,247.
 2
  The parties have been unable to locate a copy of the 1996 return. Records
 that respondent maintained in the ordinary course of business reflect that
 petitioner and Levy reported having an adjusted gross income of $124,753, a
 taxable income of $105,291, a self-employment tax liability of $560, and
 tax due of $25,080.

None of the above balance due amounts were paid when the return

for that year was filed.

      No discussions took place between petitioner and Levy about

the preparation or filing of the 1991, 1992, 1993, 1994, 1995,

1996, 1997, 1998, and 1999 returns.        Nor did petitioner and Levy

discuss the payment of the unpaid tax liability.

      As of the date of the trial in this case, with the exception

of 1991 tax liability, the Levys’ tax liabilities remained

unpaid.    During 2001 petitioner sold two residential real

properties and was entitled to real estate commissions of

$24,300.13.     On June 22, 2001, respondent levied on petitioner’s

$24,300.13 of real estate commissions and applied the proceeds to

fully satisfy the 1991 joint tax liability.

D.   Petitioner and Levy’s Divorce and Levy’s Bankruptcy Filing

      Petitioner and Levy were divorced on June 13, 2002.

Petitioner received the Key Biscayne condominium as part of the

dissolution of the marriage.      Levy also was required to pay
                              - 11 -

petitioner $4,400 per month in alimony.   Their Marital Settlement

Agreement specified that for tax purposes the $4,400 monthly

payment would not be includable in petitioner’s gross income and

would not be deductible by Levy.

      Their Marital Settlement Agreement provided that Levy would

be solely responsible for the 1991 through 1999 tax liabilities

(which were estimated to total over $718,000 as of June 28, 2001)

and the previously discussed 1979 deficiency.3

      On August 23, 2002, Levy filed a petition with the United

States Bankruptcy Court for the Southern District of Florida,

seeking relief under Chapter 7 of the Bankruptcy Code.   On

December 2, 2002, Levy was granted a discharge in his bankruptcy

proceeding, discharging him from, among other things, his 1979

and 1991 through 1999 Federal income tax liabilities.

E.   Petitioner’s Request for Relief From Joint Liability for Tax
     Under Section 6015

      On June 12, 2001, petitioner filed with respondent Form

8857, Request for Innocent Spouse Relief, in which she sought

relief from joint liability for 1979 and 1991 through 1999.

Petitioner’s Form 8857 stated, in pertinent part:

      The taxpayer [petitioner] has been living in a separate
      dwelling from her husband from late in 1994 through
      current. Although the taxpayer filed jointly with her


      3
       The agreement refers to a 1989 deficiency, not the 1979
deficiency. We infer from the nature of this controversy and the
entirety of the record that the agreement intended to refer to
the 1979 deficiency.
                              - 12 -

     husband for the tax periods in question, the tax and
     related statutory additions are attributable to her
     husband.

     Her husband has been an employed physician during those
     tax periods and generated the income that created the
     corresponding tax liability. The taxpayer was aware of
     the tax liability from previous notices and prior tax
     actions that were acted upon her husband’s accounts,
     [sic] however, she believed to her detriment that a
     plan for payment of the tax liability had been reached
     between her husband and the Internal Revenue Service.
     Most recently, she was aware that her husband had paid
     in over $20,000 as part of his agreement with the
     Service.

     The taxpayer has generated her own income starting in
     the tax year 2000 and will be responsible for any
     related tax issues from that period forward. The
     taxpayer received a notice of levy that was issued to
     her real estate broker dated 05-23-01, and this was her
     first realization that there was a problem. In fact,
     the address listed on the notice for the taxpayer is
     not her own, but her husband’s business address.

     Although the taxpayer may be legally married to her
     husband, she has not generated any significant income
     during the tax periods in question that would create
     the tax liability. Not only is this an inequitable
     situation for the taxpayer, the taxpayer will
     definitely suffer significant hardship from this
     current levy and any others that may be pending. Her
     only income source is with the real estate broker
     * * * , and these unjust levy actions unfairly restrict
     the taxpayer’s ability to earn a living.

Petitioner signed the Form 8857.   The Form 8857 had been prepared

by petitioner’s accountant.

     By Notices dated February 13 and April 24, 2002, respondent

denied petitioner’s request for any relief under section 6015.

In the February 13, 2002, Notice, respondent determined that

petitioner was not entitled to relief for 1979 under section
                              - 13 -

6015(b), (c), or (f).   Respondent explained that relief was being

denied for 1979 because petitioner had failed to respond to

respondent’s request for additional information.    In the April

24, 2002, Notice, respondent determined that petitioner was not

entitled to relief for 1991 through 1999 under section 6015(f).

Respondent explained that relief was being denied for 1991

through 1999 because petitioner had failed to respond to

respondent’s request for additional information.

                              OPINION

     Generally, married taxpayers may elect to file jointly a

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).   A spouse (requesting spouse)

may, however, seek relief from joint and several liability under

section 6015(b), or, if eligible, may allocate liability

according to provisions under section 6015(c).    Sec. 6015(a).    If

relief is not available under section 6015(b) or (c), an

individual may seek equitable relief under section 6015(f).     Sec.

6015(f)(2).

     A prerequisite to granting relief under section 6015(b) or

(c) is the existence of a tax deficiency.    Sec. 6015(b)(1)(B) and

(c)(1); Block v. Commissioner, 120 T.C. 62, 65-66 (2003).

Consequently, if there is no deficiency for the year for which

relief is sought, relief from joint and several liability is not
                                - 14 -

available under either subsection.       See Washington v.

Commissioner, 120 T.C. 137, 146-147 (2003); see also Hopkins v.

Commissioner, 121 T.C. 73, 88 (2003); Block v. Commissioner,

supra.

     When petitioner and Levy filed their joint returns for 1991

through 1999, they did not remit payment of the reported balance

due on those returns.    Petitioner thus acknowledges she does not

qualify for relief under section 6015(b) or (c) for the years

1991 through 1999, since there is no deficiency but rather an

underpayment in tax for each of those years.      See, e.g.,

Washington v. Commissioner, supra at 146-147.

      The parties agree that for 1979 (unlike 1991 through 1999)

there is a deficiency, joint liability for which petitioner is

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

A.   Relief Under Section 6015(b) for 1979

     Section 6015(b)(1) provides:

     SEC. 6015.    RELIEF FROM JOINT AND SEVERAL LIABILITY ON
                   JOINT RETURN


          (b) Procedures for Relief From Liability
     Applicable to All Joint Filers.--

                (1) In general.--Under procedures
           prescribed by the Secretary, if–-

                       (A) a joint return has been made for
                  a taxable year;

                       (B) on such return there is an
                  understatement of tax attributable to
                              - 15 -

               erroneous items of one individual filing
               the joint return;

                   (C) the other individual filing the
               joint return establishes that in signing
               the return he or she did not know, and
               had no reason to know, that there was such
               understatement;

                   (D) taking into account all the facts
               and circumstances, it is inequitable to
               hold the other individual liable for the
               deficiency in tax for such taxable year
               attributable to such understatement; and

                    (E) the other individual elects (in
               such form as the Secretary may prescribe)
               the benefits of this subsection not later
               than the date which is 2 years after the
               date the Secretary has begun collection
               activities with respect to the individual
               making the election.

     then the other individual shall be relieved of
     liability for tax (including interest, penalties, and
     other amounts) for such taxable year to the extent
     such liability is attributable to such understatement.

     Section 6015(b)(1) is similar to former section 6013(e)(1).

We may look at cases interpreting former section 6013(e)(1) for

guidance when analyzing parallel provisions of section 6015.   See

Jonson v. Commissioner, 118 T.C. 106, 119 (2002), affd. 353 F.3d

1181 (10th Cir. 2003).   The failure by a requesting spouse under

section 6015(b) to satisfy any of its requirements prevents such

spouse from qualifying for relief under that subsection.    Alt v.

Commissioner, 119 T.C. 306, 313 (2002), affd. 101 Fed. Appx. 34

(6th Cir. 2004).
                               - 16 -

     The parties here agree that petitioner satisfies the

requirements of section 6015(b)(1)(A) and (E).   Petitioner

contends, and respondent disputes, that she satisfies the

requirements of section 6015(b)(1)(B), (C), and (D).

     The return for 1979 is not in evidence.   Nor is there any

other documentary evidence concerning the nature of the

adjustment giving rise to the 1979 deficiency of $26,520 in

additional tax that respondent assessed on October 10, 1988.   At

trial, Levy testified that the adjustment concerned a tax shelter

in which he invested during 1978 or 1979.   He maintained, and we

have found, that while petitioner signed the 1979 return, she did

not examine or review the return.   He said, and we have found,

that he never discussed the 1979 return with her or the liability

that might be owed.

     Section 6015(b)(1)(C) requires petitioner to establish that

in signing the 1979 return, she did not know and had no reason to

know of the 1979 deficiency.   An appeal in this case generally

would lie in the Court of Appeals for the Eleventh Circuit,

absent an agreement to the contrary concerning appellate venue.

The principal Eleventh Circuit cases interpreting the “no reason

to know” requirement are Kistner v. Commissioner, 18 F.3d 1521,

1525-1527 (11th Cir. 1994), revg. and remanding T.C. Memo. 1991-

463, and Stevens v. Commissioner, 872 F.2d 1499, 1505 (11th Cir.
                               - 17 -

1989, affg. T.C. Memo. 1988-63.4   The standard to be applied is

whether a “reasonably prudent taxpayer under the circumstances of

the [requesting] spouse at the time of signing the return could

be expected to know that the tax liability stated was erroneous

or that further investigation was warranted.”   Stevens v.

Commissioner, supra at 1505; Bokum v. Commissioner, 94 T.C. 126,

148 (1990), affd. on other issues 992 F.2d 1132 (11th Cir. 1993).

This standard applies to deductions as well as income matters.

Stevens v. Commissioner, supra at 1505 n.8; Bokum v.

Commissioner, supra at 148.5



     4
       Kistner v. Commissioner, 18 F.3d 1521, 1525-1527 (11th
Cir. 1994), revg. and remanding T.C. Memo. 1991-463, and Stevens
v. Commissioner, 872 F.2d 1499, 1505 (11th Cir. 1989), affg. T.C.
Memo. 1988-63, involved former sec. 6013(e)(1)(C) rather than
current sec. 6015(b)(1)(C). The language of both provisions,
however, is roughly the same. See Mora v. Commissioner, 117 T.C.
279, 286 n.7 (2001).
     5
       Some of the Courts of Appeals have adopted a more lenient
approach than the Tax Court in deduction cases where a requesting
spouse knows of the transaction that gave rise to the
understatement. See Jonson v. Commissioner, 118 T.C. 106, 115-
116 (2002), affd. 353 F.3d 1181 (10th Cir. 2003). The Court of
Appeals for the Eleventh Circuit appears not to have squarely
decided this issue of which approach it will adopt for deduction
cases. See Kistner v. Commissioner, supra at 1527 (noting
favorably cases from other circuits adopting this more lenient
approach); Ferrarese v. Commissioner, 75 AFTR2d 95-524, 95-525,
95-1 USTC par. 50,038, at 87,139 (11th Cir. 1994), affg. per
curiam T.C. Memo. 1993-404. Because we believe that petitioner
has failed to meet her burden of showing she had no reason to
know of the 1979 deficiency under the more lenient approach, any
disparity between that more lenient approach and the Tax Court’s
approach is immaterial to our disposition of this case. See
Jonson v. Commissioner, supra at 116.
                              - 18 -

     In determining whether petitioner had reason to know of the

1979 deficiency, relevant factors to consider include:    (1)

Petitioner’s level of education; (2) petitioner’s involvement in

the family business and financial affairs; (3) the presence of

expenditures that appear lavish or unusual when compared to her

family’s past levels of income, standard of living, and spending

patterns; and (4) her husband’s evasiveness and deceit concerning

the couple’s finances.   See Kistner v. Commissioner, supra at

1525; Stevens v. Commissioner, supra at 1505.     In addition to the

foregoing factors, in the case of a deficiency attributable to

erroneous tax shelter deductions, a tax return setting forth

“dramatic deductions” generally will put a reasonable taxpayer on

notice that further investigation is warranted.    A requesting

spouse who has a duty to inquire but does not do so will fail the

“no reason to know” requirement of section 6015(b)(1)(C) and be

precluded from obtaining relief under section 6015(b).    See

Hayman v. Commissioner, 992 F.2d 1256, 1262 (2d Cir. 1993), affg.

T.C. Memo. 1992-228; Mora v. Commissioner, 117 T.C. 279, 289

(2001); Cohen v. Commissioner, T.C. Memo. 1987-537; Levin v.

Commissioner, T.C. Memo. 1987-67; see also Kistner v.

Commissioner, supra at 1527; Stevens v. Commissioner, supra at

1506; Bokum v. Commissioner, supra at 148-149.6


     6
       Sec. 1.6015-2(c), Income Tax Regs., is not applicable to
this case, as petitioner’s Form 8857 seeking relief under sec.
                                                   (continued...)
                               - 19 -

     A return has “dramatic deductions” where that return sets

forth large tax shelter losses offsetting income from other

sources and substantially reducing or eliminating a couple’s tax

liability.   See Hayman v. Commissioner, supra at 1262; Mora v.

Commissioner, supra at 289; Cohen v. Commissioner, supra; Levin

v. Commissioner, supra.

     As previously indicated, on their 1979 return, petitioner

and Levy claimed an improper tax shelter loss.   This tax shelter

loss offset Levy’s other income and substantially reduced

petitioner’s and his tax liability for 1979.   We find that

petitioner has failed to meet her burden of showing, as required

under section 6015(b)(1)(C), that a reasonably prudent taxpayer

in her position at the time she signed the 1979 return would have

no reason to know of the understatement or that no further

investigation was warranted.   See Reser v. Commissioner, 112 F.3d

1258, 1267-1268 (5th Cir. 1997), affg. T.C. Memo. 1995-572; Mora

v. Commissioner, supra at 289.7   We hold that petitioner is not

entitled to relief from joint liability for 1979 under section

6015(b).


     6
      (...continued)
6015(b), (c), or (f) for 1979 was filed before July 18, 2002.
See secs. 1.6015-9, 1.6015-1(a)(2), Income Tax Regs.
     7
       In so finding, we need not decide for purposes of sec.
6015(b) whether: (1) The 1979 understatement is attributable to
erroneous items of Levy, or (2) taking into account all the facts
and circumstances, it is inequitable to hold petitioner liable
for the 1979 deficiency.
                                - 20 -

B.   Relief Under Section 6015(c) for 1979

      Respondent also denied petitioner’s request for relief under

section 6015(c) for 1979.    Petitioner and Levy have each

maintained separate households since 1994.    Because she and Levy

did not reside together during the 12-month period ending on the

June 12, 2001, date when she filed her Form 8857, petitioner was

eligible to make an election under section 6015(c).    Sec.

6015(c)(3)(A)(i)(II).8

     Upon the satisfaction of certain conditions, section 6015(c)

relieves the requesting spouse of liability for the items making

up the deficiency that would have been allocable solely to the

nonrequesting spouse if the spouses had filed separate tax

returns for the taxable year.    Sec. 6015(d)(1), (3)(A); Cheshire

v. Commissioner, 282 F.3d 326, 332 (5th Cir. 2002), affg. 115

T.C. 183 (2000).   Petitioner has the burden of proving which

items would not have been allocated to her if the spouses had

filed separate returns.     Mora v. Commissioner, supra at 290

(burden of proof under section 6015(c) normally on taxpayer, but

is shifted to respondent for purposes of applying “actual




      8
       With respect to the joint liability for 1979, the 2-year
period under sec. 6015(c)(3)(B) during which petitioner had to
make the election did not expire before the date which was 2
years after the date of the first collection action against
petitioner instituted after July 22, 1998. Internal Revenue
Restructuring and Reform Act of 1998, Pub. L. 105-206, sec.
3201(g)(2), 112 Stat. 740.
                               - 21 -

knowledge” exception to relief in section 6015(c)(3)(C) (citing

Culver v. Commissioner, 116 T.C. 189, 194-196 (2001))).9

     In opposing petitioner’s claim for separate liability

election relief under section 6015(c), respondent essentially

argues only that there is insufficient evidence in the record

upon which to allocate or attribute the items giving rise to the

1979 deficiency to Levy.10   We disagree.

     As previously discussed, Levy testified that the 1979

deficiency arose from a tax shelter in which he invested.    Levy

confirmed that petitioner did not participate and had no

involvement in the tax shelter investment.    We found his

testimony to be credible.    The record reflects that petitioner

played no role whatsoever in and had little knowledge of Levy’s

medical business or his other financial dealings.    Petitioner was

a full-time homemaker and did not have her own source of income

until 1999.   Petitioner has established by a preponderance of the

evidence that the 1979 deficiency is entirely allocable to Levy.

See, e.g., Mora v. Commissioner, 117 T.C. at 290-291; cf. Feldman


     9
       Unlike sec. 6015(b), a mere “reason to know” is
insufficient to preclude relief under sec. 6015(c). See Cheshire
v. Commissioner, 282 F.3d 326, 337 n.26 (5th Cir. 2002), affg.
115 T.C. 183 (2000); Charlton v. Commissioner, 114 T.C. 333, 341-
342 (2000).
     10
       Respondent has not argued that either the tax benefit
exception of sec. 6015(d)(3)(B) or the fraud exception of sec.
6015(d)(3)(C) is applicable. See Mora v. Commissioner, 117 T.C.
at 293-294. There are no facts to suggest that either exception
applies here.
                              - 22 -

v. Commissioner, 20 F.3d 1128, 1136-1137 (11th Cir. 1994), affg.

T.C. Memo. 1993-17.   In addition, respondent has not shown that

petitioner had actual knowledge of the item giving rise to the

deficiency.   See sec. 6015(c)(3)(C).

      Accordingly, we hold that petitioner is entitled to relief

under section 6015(c) from joint liability for the 1979

deficiency.   In light of this holding, we need not consider

whether petitioner is eligible to receive relief under section

6015(f) for 1979.11

C.   Relief Under Section 6015(f) for 1991 Through 1999

      Respondent denied petitioner’s request for equitable relief

under section 6015(f) from joint liability for 1991, 1992, 1993,

1994, 1995, 1996, 1997, 1998, and 1999.

      We have jurisdiction to review the Commissioner’s denial of

a requesting spouse’s request for equitable relief under section

6015(f).   Washington v. Commissioner, 120 T.C. at 145; Ewing v.

Commissioner, 118 T.C. 494, 497-507 (2002).   To prevail,

petitioner must establish that respondent’s denial of equitable

relief under section 6015(f) was an abuse of discretion.

Washington v. Commissioner, supra at 146; Cheshire v.


      11
       Refunds are limited to situations where relief is granted
under sec. 6015(b) or (f). See sec. 6015(g). However, there is
no indication in the record that petitioner would be entitled to
a refund or credit if granted relief under sec. 6015. Because
relief under sec. 6015(f) would not provide petitioner any more
relief than she would obtain under sec. 6015(c), we need not give
this matter further consideration. See sec. 6015(f)(2).
                               - 23 -

Commissioner, 115 T.C. 183, 198 (2000), affd. 282 F.3d 326 (5th

Cir. 2002).

     Respondent denied petitioner’s request for equitable relief

under section 6015(f) for 1991 through 1999 on the basis that she

had failed to reply to respondent’s request for additional

information.12   We note that in reviewing whether respondent’s

determination was an abuse of discretion, our finding is made in

a trial de novo and is not limited to matter contained in

respondent’s administrative record.     Ewing v. Commissioner, 122

T.C. 32, 44 (2004).

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

prescribed guidelines in Rev. Proc. 2000-15, 2000-1 C.B. 447,

448, that the Commissioner will consider in determining whether

an individual qualifies for relief under section 6015(f).    Rev.

Proc. 2000-15, sec. 4.01, 2000-1 C.B. at 448, lists seven

conditions (threshold conditions) which must be satisfied before

the Commissioner will consider a request for relief under section

6015(f).   Respondent agrees that those threshold conditions are

satisfied in this case.13


     12
       Petitioner alleges that her failure to respond and
provide additional information resulted from the letters to her
from the Internal Revenue Service not being forwarded timely to
her by Levy and other persons at her accountant’s old business
office address.
     13
       Rev. Proc. 2003-61, 2003-2 C.B. 296, 299, which
superseded Rev. Proc. 2000-15, 2000-1 C.B. 447, is not applicable
                                                   (continued...)
                             - 24 -

     Rev. Proc. 2000-15, sec. 4.03, 2000-1 C.B. at 448, lists

factors that the Commissioner will consider in deciding whether

to grant equitable relief under section 6015(f).   Rev. Proc.

2000-15, sec. 4.03(1), 2000-1 C.B. at 448-449, lists the

following six factors that the Commissioner will consider as

weighing in favor of granting relief for an unpaid liability:

(1) The requesting spouse is separated or divorced from the

nonrequesting spouse; (2) the requesting spouse would suffer

economic hardship if relief is denied; (3) the requesting spouse

was abused by the nonrequesting spouse; (4) the requesting spouse

did not know or have reason to know that the reported liability

would be unpaid; (5) the nonrequesting spouse has a legal

obligation pursuant to a divorce decree or agreement to pay the

unpaid liability; and (6) the unpaid liability is solely

attributable to the nonrequesting spouse.

     Rev. Proc. 2000-15, sec. 4.03(2), 2000-1 C.B. at 449, lists

the following six factors that the Secretary will consider as



     13
      (...continued)
in the instant case. Rev. Proc. 2003-61, supra, is effective for
requests for relief filed under sec. 6015(f) which are filed on
or after Nov. 1, 2003, and for requests for such relief which
were pending on, and for which no preliminary determination
letter has been issued as of, that date. Rev. Proc. 2003-61,
sec. 7, 2003-2 C.B. at 299. Here, petitioner’s Form 8857 was
filed on June 12, 2001, and was no longer pending on Nov. 1,
2003, as respondent denied her request for relief therein in
Notices dated Feb. 13 and Apr. 24, 2002.
                              - 25 -

weighing against granting relief for an unpaid liability:    (1)

The unpaid liability is attributable to the requesting spouse;

(2) the requesting spouse knew or had reason to know that the

reported liability would be unpaid at the time the return was

signed; (3) the requesting spouse benefited (beyond normal

support) from the unpaid liability; (4) the requesting spouse

will not suffer economic hardship if relief is denied; (5) the

requesting spouse has not made a good faith effort to comply with

Federal income tax laws in the tax years following the tax year

or years to which the request for relief relates; and (6) the

requesting spouse has a legal obligation pursuant to a divorce

decree or agreement to pay the unpaid liability.   In addition,

Rev. Proc. 2000-15, sec. 4.03, 2000-1 C.B. at 448-449, states:

“No single factor will be determinative of whether equitable

relief will or will not be granted in any particular case.

Rather, all factors will be considered and weighed

appropriately.”   Furthermore, the list of aforementioned factors

is not intended to be exclusive.

     In deciding whether respondent’s determination that

petitioner is not entitled to relief under section 6015(f) was an

abuse of discretion, we consider evidence relating to all the

facts and circumstances.   See generally Washington v.

Commissioner, supra at 148.
                              - 26 -

     In this case, respondent acknowledges that the marital

factor (i.e., that petitioner was divorced or separated from

Levy) weighs in favor of granting petitioner relief for all

years.   Respondent further acknowledges that the attribution

factor (i.e., that the unpaid tax liability for the tax year for

which relief is sought is solely attributable to Levy) weighs in

favor of granting petitioner relief for all years except 1999.

     In opposing relief to petitioner, respondent contends:

(1) Levy had no legal obligation to pay the 1991 through 1999 tax

liabilities, as petitioner knew his obligation under their

marital settlement agreement to pay those taxes was illusory; (2)

petitioner was not abused by Levy; (3) petitioner has failed to

show she would suffer economic hardship if relief were not

granted; (4) petitioner knew or had reason to know that her 1991

through 1999 tax liabilities would not be paid at the time each

return for those years was filed; (5) petitioner significantly

benefited from the unpaid tax liabilities; (6) petitioner failed

to make a good faith effort to comply with Federal income tax

laws in following tax years; and (7) a portion of the 1999 tax

liability is attributable to petitioner.

     Some of respondent’s contentions are not supported by the

record, and each of these factors will be addressed separately.
                              - 27 -

     1.   Requesting Spouse’s Legal Obligation Factor

     Petitioner and Levy’s marital settlement agreement placed

the legal obligation to pay the unpaid 1991 through 1999 tax

liabilities exclusively on Levy.    Respondent notes, however, that

Rev. Proc. 2000-15, sec. 4.03(1)(3), 2000-1 C.B. at 449, provides

that this will not be a factor weighing in favor of relief if

petitioner knew or had reason to know, at the time the divorce

agreement was entered, that Levy would not pay the tax

liabilities.   Respondent argues:

          During June of 2001, respondent levied real estate
     commissions the petitioner earned. * * *

          The petitioner filed her request for innocent
     spouse relief on June 11, 2001.   * * *
     Approximately ten months later, on April 12, 2002,
     petitioner entered into a Marital Settlement Agreement
     with [Levy]. * * *

          It would be incredible for the petitioner to argue
     that she had no reason to know that [Levy] would not
     honor the terms of the Marital Settlement Agreement
     considering [Levy’s] history of noncompliance with the
     requirements of Federal tax law. Moreover, the fact
     that petitioner continued to pursue I.R.C. sec. 6015
     relief even after the Marital Settlement Agreement
     obligated [Levy] to pay the delinquent taxes supports a
     finding that petitioner knew [Levy] would not honor the
     terms of that agreement. Indeed, any doubts the
     petitioner may have had about [Levy] complying with the
     terms of the Marital Settlement Agreement were resolved
     by August, 2002, at which time [Levy] filed for
     bankruptcy.

     We reject respondent’s argument that petitioner knew or had

reason to know that Levy would not pay the 1991 through 1999 tax

liabilities at the time they entered their marital settlement
                               - 28 -

agreement.   That agreement was the product of arm’s length

negotiations between petitioner and Levy.    Petitioner and Levy

were adversaries, and each was represented by his or her own

divorce attorney.   In the dissolution of the marital

relationship, petitioner insisted that Levy agree to be liable

exclusively for the tax liabilities.    Although shortly after the

divorce on June 13, 2002, Levy filed for and obtained a

bankruptcy discharge from the tax liabilities, at the time the

marital settlement agreement was entered, petitioner and her

attorney had not anticipated the bankruptcy and discharge of

Levy.   Petitioner did not know or have reason to know then that

Levy would attempt to avoid paying the tax liabilities by

obtaining a bankruptcy discharge.

     We also disagree with respondent’s contention that

petitioner’s continuance of her efforts to seek innocent spouse

relief for 1979 and 1991 through 1999 after the conclusion of the

marital settlement agreement somehow establishes that she knew

Levy would not honor his obligation under that agreement to pay

those tax liabilities.    In continuing to prosecute her claim for

innocent spouse relief, petitioner was acting in her own best

interest.    As of June 28, 2001, the 1979 and 1991 through 1999

tax liabilities were estimated to be more than $718,000.    The

marital settlement agreement between petitioner and Levy (under

which Levy agreed to be liable exclusively for those tax
                                 - 29 -

liabilities) would not bar respondent from undertaking future

collection action against petitioner upon the unpaid tax

liabilities.   Although Levy earned substantial income as an

oncological surgeon, he lacked current assets sufficient to pay

the tax liabilities.      Additionally, if petitioner were granted

relief as an innocent spouse from joint liability for 1991 under

section 6015(b) or (f), she would be entitled to a $24,300.13

refund attributable to      previously levied real estate

commissions.   See sec. 6015(g)(1), (3); Washington v.

Commissioner, 120 T.C. at 153-154.

     This factor weighs in favor of granting petitioner equitable

relief for 1991 through 1999.      Cf. Knorr v. Commissioner, T.C.

Memo. 2004-212.

     2.    Abuse Factor

     Petitioner does not assert that she was abused by Levy or

otherwise coerced into executing the 1991 through 1999 joint

returns.    Lack of spousal abuse is not a factor listed in section

4.03(2) of Rev. Proc. 2000-15, 2000-1 C.B. at 449, that weighs

against granting equitable relief.        Therefore, this factor is

neutral.    See Washington v. Commissioner, supra at 149.

     3.    Economic Hardship Factor

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

provides that the determination of whether a requesting spouse

will suffer economic hardship if relief is not granted will be
                               - 30 -

based on rules similar to those provided in section 301.6343-

(1)(b)(4), Proced. & Admin. Regs.14     Respondent contends that

petitioner has failed to establish that she would suffer economic

hardship if relief were denied for 1991 through 1999.     We agree

with respondent.

     Petitioner provided inadequate evidence addressing pertinent

factors given in section 301.6343-1(b)(4), Proced. & Admin. Regs.

Petitioner mainly relied only upon her own self-serving and

conclusory testimony that she lacks the income and financial

resources to pay the 1979 and 1991 through 1999 tax liabilities.

She failed to offer any evidence concerning her reasonable basic

living expenses and the cost of living in the Miami, Florida,

area.

     Petitioner received the Key Biscayne condominium from the

dissolution of the marriage.   On cross-examination by respondent,

petitioner estimated that the Key Biscayne condominium had a



     14
       Sec. 301.6343-1(b)(4)(ii), Proced. & Admin. Regs.,
provides factors that will be considered in determining whether
satisfaction of the levy will cause an individual taxpayer
economic hardship due to an inability to pay reasonable living
expenses. These factors include: (1) The taxpayer’s age,
employment status and history, ability to earn, and the number of
dependents; (2) the amount reasonably necessary for food,
clothing, housing, medical expenses, transportation, and current
tax payments; (3) the cost of living in the geographic area; (4)
the amount of property exempt from levy which is available to pay
the taxpayer’s expenses; and (5) any other factor the taxpayer
claims bears on economic hardship and brings to the attention of
the director.
                              - 31 -

value of $350,000 and further related that the condominium was

encumbered by a $60,000 mortgage.   Petitioner was also entitled

to receive $4,400 per month in nontaxable payments from Levy.

Petitioner earned $21,600 as a real estate agent for 2003.

Additionally, by 2002 all three of her children had reached

majority and were no longer her dependents.     We conclude that

petitioner has failed to meet her burden of showing that she

would suffer economic hardship if relief were not granted to her

for 1991 through 1999.   See Knorr v. Commissioner, supra (noting,

among other things, that requesting spouse’s situation was

dissimilar to other cases where taxpayers were living at or near

poverty level and proved they would suffer economic hardship

without granting of relief); Ogonoski v. Commissioner, T.C. Memo.

2004-52 (holding that economic hardship factor weighed against

taxpayer because she failed to introduce sufficient current

financial information on that factor); Castle v. Commissioner,

T.C. Memo. 2002-142 (holding that taxpayer failed to establish

economic hardship because she did not offer evidence regarding

pertinent factors in determining her reasonable basic living

expenses).

      This lack of economic hardship weighs against granting

petitioner relief for 1991 through 1999.

      4.   Knowledge or Reason To Know Factor

     In the case of a liability that was reported but not paid,

the fact that the requesting spouse did not know and had no
                               - 32 -

reason to know that the liability would not be paid at the time

the return was signed is a factor weighing in favor of granting

relief.    Rev. Proc. 2000-15, sec. 4.03(1)(d), 2000-1 C.B. at 449.

By contrast, the fact that the requesting spouse knew or had

reason to know that the reported liability would not be paid is a

strong factor weighing against relief.   Rev. Proc. 2000-15, sec.

4.03(2)(b), 2000-1 C.B. at 449.

     Respondent contends that petitioner had reason to know that

the tax liability for 1991 through 1999 would not be paid by Levy

because (1) the returns for those years (except that for 1994)

were filed late and (2) she failed to review the returns and

inquire whether the taxes would be paid.   Alternatively,

respondent contends that petitioner, at a minimum, had reason to

know the 1996 through 1999 balance due amounts would not be paid

by Levy.   Among other things, respondent notes that on May 22,

1997, prior to the time she signed the returns for those years,

petitioner had executed a tax collection waiver showing that she

and Levy still had an unpaid tax liability for 1979 of more than

$49,000.   She and Levy had agreed to the adjustment giving rise

to that 1979 liability no later than October 10, 1988, the date

the tax was assessed.

     We disagree with respondent’s argument that petitioner had

reason to know that Levy would not pay the 1991 through 1995 tax
                               - 33 -

liabilities.   The 1991 through 1995 tax liabilities were

attributable to Levy, as petitioner had no source of income.

Levy controlled all aspects of his medical business, and he

conducted his business and financial affairs without any

assistance or involvement from petitioner.      Levy arranged for the

preparation of the 1991 through 1995 returns.      He did not discuss

with petitioner the preparation and the filing of those returns

and the payment of the tax owed.

     Contrary to respondent’s argument, we are unwilling to infer

here that the late filing of the 1991, 1992, 1993, and 1995

returns should have given petitioner reason to know that Levy

would not pay the tax liabilities.      The 1991 return was filed

only about 3 weeks late on November 5, 1992.      The 1992 and 1993

returns (along with the timely filed 1994 return) were filed on

August 15, 1995, and were filed, respectively, 22 months and 10

months late.   The 1995 return was filed almost 4 months late on

February 11, 1997.    We think a person in petitioner’s position

could reasonably have believed that the late filing of the 1992,

1993, and 1995 returns was due to the domestic turmoil between

petitioner and Levy.    Petitioner and Levy separated in 1994, and

each moved out of the Key Biscayne condominium that had been

their marital home.    Thereafter, they each maintained a separate

household and lived apart.
                                - 34 -

     More importantly, Levy earned substantial income from which

he had adequate funds to pay the reported 1991 through 1995

balance due amounts.     On their 1993 return, he and petitioner

reported having a total income of $249,326.     On their 1994

return, they reported having a total income of $547,865.     The

record further reflects that Levy concealed his gambling problem

from petitioner, and that she did not find out about the severity

of his problem until long after she had signed the 1991 through

1995 returns.

     We conclude that petitioner had no knowledge or reason to

know that the reported balance due amounts would not be paid by

Levy.     See, e.g., Ewing v. Commissioner, 122 T.C. at 47-48;

Washington v. Commissioner, 120 T.C. at 150-151.

        With respect to the 1996 through 1999 balance due amounts,

however, petitioner had reason to know that Levy would not pay

those tax liabilities at the time she signed the returns for

those years.     At trial, petitioner claimed that she had no idea

that Levy had not been paying their taxes until sometime in 2001,

after respondent took action to levy upon her real estate

commissions.     She confronted Levy and then talked to their

accountant.     Yet, petitioner later acknowledged that she signed
                               - 35 -

the tax collection waiver for 1979 on May 22, 1997.   That waiver

reflected that she and Levy still had an unpaid tax liability for

1979 of more than $49,000.

     Additionally, as respondent points out, petitioner’s Form

8857 states that she knew of the unpaid tax liabilities from

prior collection actions that respondent took against Levy’s

accounts.   Although her Form 8857 does not specify the dates upon

which those collection actions against his accounts occurred,

respondent notes that such actions likely took place in March and

April of 1997.   The Form 4340, Certificate of Assessments,

Payments, and other Specified Matters, for 1979 reflects that

respondent levied (1) $91.26 on March 7, 1997; (2) $113.98 on

April 10, 1997; and (3) $5,000 on April 10, 1997.

     Petitioner, among other things, argues:   (1) The Form 8857

(which petitioner signed) was prepared by her accountant, and (2)

the record does not definitively establish the dates the

collection actions referenced in the Form 8857 occurred.

     Petitioner, however, overlooks the fact that her accountant

knew the details with respect to the collection actions

referenced in the Form 8857.   Petitioner failed to offer her

accountant’s testimony.   The accountant could have clarified that

these collection actions for 1979 involved levies upon Levy’s

accounts during March and April 1997.
                                - 36 -

     Prior to the time she signed the returns for 1996 through

1999, petitioner (1) knew respondent had taken collection actions

for 1979 involving levies upon Levy’s accounts during March and

April of 1997, and (2) had signed a tax collection waiver on May

22, 1997, showing that she and Levy still owed an unpaid tax

liability of more than $49,000 for 1979.   We conclude that

petitioner had reason to know that Levy would not pay the 1996

through 1999 balance due amounts at the time she signed the

returns for those years.   See Knorr v. Commissioner, T.C. Memo.

2004-212.

     This factor weighs in favor of granting petitioner relief

for 1991 through 1995, but weighs against granting petitioner

relief for 1996 through 1999.

     5.   Significant Benefit Factor

     Rev. Proc. 2000-15, sec. 4.03(2)(c), 2000-1 C.B. at 448,

provides that the requesting spouse significantly benefiting

(beyond normal support) from the unpaid liability is a factor

weighing against granting her relief.    Section 4.03(2)(c) of Rev.

Proc. 2000-15, supra, references former section 1.6013-5(b),

Income Tax Regs., for purposes of determining whether the

requesting spouse received a significant benefit.15    Although

     15
       Former sec. 1.6013-5(b), Income Tax Regs. (Aug. 5, 1974),
provided, in pertinent part:

     In making such a determination a factor to be
                                                      (continued...)
                             - 37 -

Rev. Proc. 2000-15 includes the statement that the significant

benefit factor can only favor respondent, this Court has held

that the fact the requesting spouse did not significantly benefit

can weigh in favor of the requesting spouse.    This is because

caselaw under former section 6013(e)(1)(D) considered the fact

that the taxpayer did not significantly benefit as a factor in

favor of granting relief to that taxpayer.     Ewing v.

Commissioner, 122 T.C. at 45; Ferrarese v. Commissioner, T.C.

Memo. 2002-249; see also Mitchell v. Commissioner, 292 F.3d 800,

806 (D.C. Cir. 2002) (cases deciding whether a taxpayer was

entitled to equitable relief under former section 6013(e)(1)(D)

are helpful in deciding whether a taxpayer is entitled to relief

under section 6015(f)), affg. T.C. Memo. 2000-332; Cheshire v.

Commissioner, 282 F.3d at 338 n.29.

     Respondent contends that petitioner significantly benefited

from the unpaid 1991 through 1999 tax liabilities.    Specifically,

     15
      (...continued)
     considered is whether the person seeking relief
     significantly benefitted, directly or indirectly, from
     the items omitted from gross income. However, normal
     support is not a significant ‘benefit’ for purposes of
     this determination. Evidence of direct or indirect
     benefit may consist of transfers of property, including
     transfers which may be received several years after the
     year in which the omitted item of income should have
     been included in gross income. Thus, for example, if a
     person seeking relief receives from his spouse an
     inheritance of property or life insurance proceeds
     which are traceable to items omitted from gross income
     by his spouse, that person will be considered to have
     benefitted from those items. * * *
                               - 38 -

respondent asserts:   (1) Petitioner directly and significantly

benefited from Levy’s payment of all the expenses of maintaining

petitioner’s separate household (including the mortgage, condo

fees, utilities and other expenses) following their separation in

1994; (2) petitioner directly benefited through receiving the Key

Biscayne condominium under her and Levy’s marital settlement

agreement; and (3) she indirectly benefited through Levy’s

payment of their three children’s college tuitions.

     Although Levy paid the living expenses relating to

petitioner’s separate household and the mortgage on the Key

Biscayne condominium, such payments were not lavish expenditures

beyond what is required for petitioner’s normal support.

Petitioner thus did not significantly benefit from the unpaid

1991 through 1999 tax liabilities by Levy’s payment of her

separate household expenses.   See Estate of Krock v.

Commissioner, 93 T.C. 672, 678-679 (1989) (normal support is

determined by the circumstances of the parties); Ogonoski v.

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

Memo. 1995-16.

     Similarly, the transfer to petitioner of the Key Biscayne

condominium did not result in petitioner’s receiving more than

she otherwise would have as part of a divorce settlement.    Under

the marital settlement agreement, petitioner received the

condominium and Levy’s promise to pay her $4,400 per month in
                               - 39 -

alimony.   The condominium had been jointly owned by petitioner

and Levy since 1980 and had been their marital home.   It

constituted the only significant asset listed in the marital

settlement agreement.    Petitioner thus did not significantly

benefit from the unpaid 1991 through 1999 tax liabilities by

receiving the Key Biscayne condominium under the marital

settlement agreement.    Cf. Stiteler v. Commissioner, T.C. Memo.

1995-279 (holding that taxpayer significantly benefited from tax

understatements due to her receipt of significant cash and notes

under separation agreement, where cash and notes were in addition

to proceeds from sale of family residence and spousal support),

affd. 108 F.3d 339 (9th Cir. 1997).

     With respect to the college tuition payments, however,

matters are different.    As previously discussed, normal support

is not a significant benefit and is measured by the circumstances

of the parties.   See Estate of Krock v. Commissioner, supra.     In

determining whether the requesting spouse significantly benefited

from the unpaid tax liabilities, we consider whether the

requesting spouse and the nonrequesting spouse were able to make

expenditures in the taxable years in question that they would not

have been able to make.    See Alt v. Commissioner, 119 T.C. 306,

314-15 (2002); Jonson v. Commissioner, 118 T.C. 106, 119-120

(2002); Knorr v. Commissioner, T.C. Memo. 2004-212; Monsour v.
                               - 40 -

Commissioner, T.C. Memo. 2004-190.16     Here, the unpaid 1991

through 1999 tax liabilities enabled Levy to pay the college

tuitions of the three children and still maintain petitioner’s

and his normal standard of living.      These payments that he made

for the children’s college educations were significant.     We

conclude that petitioner significantly benefited from the unpaid

1991 through 1999 tax liabilities.      See Alt v. Commissioner,

supra; Jonson v. Commissioner, supra.

     This factor weighs against granting petitioner relief.

     6.    Compliance Factor

     Section 4.03(2)(e) of Rev. Proc. 2000-15, 2000-1 C.B. at

449, provides that the requesting spouse’s failure to make a good

faith effort to comply with Federal income tax laws in tax years

following the tax years for which relief is sought is a factor

weighing against relief.    Respondent contends that petitioner in

multiple instances did not comply with Federal income tax law

requirements for her 2000 through 2002 taxable years.     Respondent

notes:    (1) Petitioner filed her Form 1040 for 2000 (for which

she used a filing status of married filing separate) on October

21, 2002, approximately 1 year late; (2) petitioner paid the tax

she owed for 2000 on December 4, 2002, about 20 months after it

was due; (3) she paid the tax she owed for 2001 on December 4,

     16
       The equitable factors we consider under sec. 6015(f) are
the same equitable factors we consider under sec. 6015(b)(1)(D).
Ewing v. Commissioner, 122 T.C. 32, 48-49 n.15 (2004).
                               - 41 -

2002, almost 8 months after it was due; and (4) she paid the tax

she owed for 2002 on October 19, 2003, about 6 months after it

was due.

     We agree with respondent that petitioner failed to make a

good faith effort to comply with income tax laws for tax years

following the tax years in issue, 1991 through 1999.   See Castle

v. Commissioner, T.C. Memo. 2002-142 (requesting spouse failed to

establish compliance factor did not apply against her where she

provided no explanation for filing return for subsequent tax year

more than 1 year late); cf. Ewing v. Commissioner, 122 T.C. at

46-47.

     This factor weighs against granting petitioner relief.

     7.    Attribution Factor for 1999

     As previously discussed, respondent acknowledges that the

attribution factor weighs in favor of granting petitioner relief

for 1991 through 1998.    Section 4.03(1)(f) of Rev. Proc. 2000-15,

2000-1 C.B. at 448-449, provides that the fact that the liability

for which relief is sought is solely attributable to the

nonrequesting spouse weighs in favor of relief.   Section

4.03(2)(a) of Rev. Proc. 2000-15, 2000-1 C.B. at 449, provides

that the fact that the unpaid liability is attributable to the

requesting spouse weighs against granting relief.   Respondent

contends that the attribution factor does not weigh in favor of
                               - 42 -

granting petitioner relief for 1999, as some of the liability for

that year is attributable to her.

     Because the weight of all other factors weighs against

granting petitioner relief for the taxable years 1996 through

1999, we need not decide the extent to which the attribution

factor affects granting petitioner relief for 1999.

     8.    Other Factor

     Rev. Proc. 2000-15, sec. 4.03, 2000-1 C.B. at 448,

acknowledges that the factors listed therein are not exhaustive.

Despite this, respondent did not consider the fact that

petitioner did not participate in any wrongdoing with respect to

the unpaid 1991 through 1995 tax liabilities.   As previously

discussed, petitioner from the time she signed the returns for

those years until 1997, reasonably believed Levy would pay the

1991 through 1995 balance due amounts.   The problem originated

with Levy, who, as discussed above, concealed from petitioner his

nonpayment of those tax liabilities and his serious gambling

problem.    See Ewing v. Commissioner, 122 T.C. at 48-49 (holding

that husband’s concealment from taxpayer of his nonpayment of tax

liability was a factor supporting taxpayer’s claim for relief

under section 6015(f)).

     With respect to the 1996 through 1999 tax liabilities,

however, as discussed supra, petitioner had reason to know Levy

would not pay those liabilities at the time she signed the
                              - 43 -

returns for those years.   See Knorr v. Commissioner, T.C. Memo.

2004-212 (noting Tax Court’s consistent application of principle

that provisions providing relief from joint and several liability

were designed to protect the innocent, not the intentionally

ignorant); cf. Ewing v. Commissioner, 122 T.C. at 47-49.

     Levy’s concealment of his nonpayment of taxes and gambling

problem weighs in favor of granting petitioner relief for 1991

through 1995, but not for 1996 through 1999.

     9.   Conclusions

     Although it is undisputed that petitioner meets the

threshold conditions of section 4.01 of Rev. Proc. 2000-15,

supra, she does not qualify for relief under section 6015(f) for

1991 through 1999 under section 4.02 of Rev. Proc. 2000-15

because, among other things, she has failed to establish that she

will suffer economic hardship if relief is not granted.

Petitioner, however, may still qualify for relief under section

6015(f) if, taking into account all the facts and circumstances,

it is inequitable to hold petitioner liable for all or part of

the unpaid liability.   Rev. Proc. 2000-15, sec. 4.03, 2000-1 C.B.

at 448-449.

     As previously discussed, petitioner had no knowledge or

reason to know, at the time she signed the returns for 1991

through 1995, that Levy would not pay those tax liabilities.

Indeed, Levy concealed from her for some time his nonpayment of
                              - 44 -

those tax liabilities and his serious gambling problem.   In

addition, as respondent acknowledges, those liabilities were

solely attributable to Levy, and petitioner and he were separated

at the time she filed her Form 8857.   Levy also had a legal

obligation pursuant to their marital settlement agreement to pay

those liabilities.   Although petitioner significantly benefited

from the unpaid liabilities and failed to establish that she

would suffer economic hardship if relief from those liabilities

were not granted to her, other important factors favor granting

relief.   The factors weighing in favor of granting petitioner

relief for 1991 through 1995 outweigh those weighing against

granting her relief.   Based upon our examination of the entire

record before us, we conclude that it would be inequitable to

hold petitioner liable for the 1991 through 1995 tax liabilities.

See Vuxta v. Commissioner, T.C. Memo. 2004-84; Ferrarese v.

Commissioner, T.C. Memo. 2002-249.

     We further conclude that petitioner has failed to carry her

burden of establishing that respondent abused his discretion in

denying her relief under section 6015(f) for 1996 through 1999.

Among other things, petitioner had reason to know that Levy would

not pay the 1996 through 1999 tax liabilities at the time she

signed the returns for those years.    This is an extremely strong

factor weighing against granting her relief for those years.

Rev. Proc. 2000-15, sec. 4.03(2)(b), 2000-1 C.B. at 449; see also
                             - 45 -

Knorr v. Commissioner, supra; cf. Foor v. Commissioner, T.C.

Memo. 2004-54 (noting that where other factors in favor of

equitable relief are unusually strong, it is appropriate to grant

relief under section 6015(f) only in limited situations where

requesting spouse knew or had reason to know liability would not

be paid).

     To reflect the foregoing,

                                        Decision will be entered

                                   for petitioner for 1979, 1991,

                                   1992, 1993, 1994, and 1995.

                                        Decision will be entered

                                   for respondent for 1996, 1997,

                                   1998, and 1999.
