                   T.C. Summary Opinion 2003-142



                      UNITED STATES TAX COURT



JANICE L. CARDIFF, f.k.a. JANICE DUNN, Petitioner, STEPHEN DUNN,
   Intervenor v. COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 16011-02S.             Filed October 1, 2003.


     Janice L. Cardiff, pro se.

     Stephen Dunn, pro se.

     Sylvia Shaughnessy, for respondent.



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

the provisions of section 7463 of the Internal Revenue Code in

effect at the time the petition was filed.   Unless otherwise

indicated, section references are to the Internal Revenue Code as

amended.   The decision to be entered is not reviewable by any

other court, and this opinion should not be cited as authority.

     This Court must decide whether respondent abused his
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discretion in determining that petitioner qualified for full

equitable relief under section 6015(f).

     Some of the facts in this case have been stipulated and are

so found.    Petitioner resided in Oceanside, California, at the

time she filed her petition.    Intervenor resided in Vista,

California, at the time of the filing of the Notice of

Intervention in this case.

     Petitioner and intervenor, while married, jointly filed a

Form 1040, U.S. Individual Income Tax Return, for 1994.

     The 1994 return reflects a balance due of $4,531.    Neither

petitioner nor intervenor paid this amount when the 1994 return

was filed.    A portion of the amount plus statutory accruals

remains unpaid.

     Petitioner and intervenor legally separated sometime during

1995, and were divorced on November 20, 1996.    Neither the

divorce decree nor the marital separation agreement allocates or

addresses responsibility for payment of the 1994 income tax

liability.

     In 1996, petitioner filed a Chapter 7 bankruptcy petition,

but the 1994 income tax debt was not discharged because the 1994

tax return was due within the 3-year period prior to the filing

of the petition.

     On May 29, 2001, petitioner filed a Form 8857, Request for

Innocent Spouse Relief, seeking relief from liability for the
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underpayment of 1994 income taxes at issue herein, as well as for

an unpaid income tax deficiency for 1992.

     In the Final Notice of Determination dated July 24, 2002,

respondent granted partial relief (50 percent) to petitioner from

joint and several liability for the tax liability on the 1994

joint return.

     After petitioner filed the petition in this case, the

administrative file was forwarded to the San Diego Appeals Office

for consideration.   The Appeals Officer recommended that

petitioner be granted full relief from joint and several

liability for the underpayment as requested, rather than only 50

percent relief as previously determined.

     Intervenor filed his Notice of Intervention on December 31,

2002.   He disputes that petitioner is entitled to full equitable

relief from joint liability instead of the 50 percent relief

previously granted by respondent in the final determination

letter upon which petitioner’s case is based.

     In this case, we are concerned only with section 6015(f).

Section 6015(f) provides in pertinent part:

           SEC. 6015(f). Equitable Relief.–-Under procedures
     prescribed by the Secretary, if--

                 (1) taking into account all the facts and
           circumstances, it is inequitable to hold the individual
           liable for any unpaid tax or any deficiency (or any
           portion of either);

                           * * * * * * *
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     the Secretary may relieve such individual of such liability.

     The Court applies an abuse of discretion standard to review

respondent’s determinations under section 6015(f).     Jonson v.

Commissioner, 118 T.C. 106, 125 (2002); Cheshire v. Commissioner,

115 T.C. 183, 198 (2000), affd. 282 F.3d 326 (5th Cir. 2002);

Butler v. Commissioner, 114 T.C. 276, 292 (2000).

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

procedures to use in determining whether the requesting spouse

qualifies for relief under section 6015(f).    Those procedures are

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

15, sec. 3, 2000-1 C.B. at 448, is applicable to any liability

for tax arising on or before July 28, 1998, that was unpaid on

that date.   The revenue procedure includes a partial list of the

positive and negative factors to be considered, including whether

the requesting spouse is divorced, whether the requesting spouse

would suffer undue economic hardship, whether the requesting

spouse had no reason to know that the liability would not be

paid, and whether the requesting spouse significantly benefitted

beyond normal support from the unpaid liability.     Id. sec.

4.03(1) and (2), 2000-1 C.B. at 448-449.    “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.”     Id. sec. 4.03.

     In concluding that petitioner be granted full relief from
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liability, respondent pointed out that the earlier determination

erroneously computed petitioner’s liability under the community

property rules.   Section 6015(a) provides that a determination

under this section is to be made without regard to community

property rules.

     Petitioner is divorced.

     On the 1994 return, $65,580 is income from Schedule E,

Supplemental Income and Loss, from intervenor’s S corporation,

Construction Planning & Management, Inc.    The rest of the income

is from petitioner’s wages as a fitness instructor of $4,434, an

annuity distribution to her of $1,076, and unemployment

compensation to her of $3,510.    Petitioner also had a loss of

$2,610 as reported on her Schedule C, Profit or Loss From

Business.   Petitioner had withholding of $688 and intervenor made

estimated payments of $883.    Respondent concluded that the

underpayment of tax was due to intervenor’s failure to make

estimated payments on his income.

     Intervenor strictly controlled the family finances and had

total control over the moneys.    He also prepared all the tax

returns and presented a completed return to petitioner and told

her to “sign this.”   Petitioner stated that she had no reason to

believe that intervenor was not paying taxes on moneys he earned.

She also stated that she did not have any knowledge or belief

that the taxes had not been paid.    Respondent gave petitioner the
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benefit of the “no reason to know” factor under Rev. Proc. 2000-

15, supra.

     Petitioner submitted an income and expense declaration to

respondent, which showed monthly expenses exceeding her monthly

income by $1,605.    At trial, intervenor mentioned a house

petitioner owns.    As a result of the divorce, the house owned by

petitioner and intervenor was foreclosed.    Subsequently, family

friends gave petitioner a house, in which she lives with her

children.    Petitioner has a tenant and uses the rent to make

mortgage payments.    The rent is less than the interest due and no

payments are made on principal.    Petitioner explained this

resulted in negative amortization and the principal increases

each month.    Respondent concluded that petitioner would suffer

undue economic hardship.

     Because of the manner in which intervenor controlled the

finances, petitioner did not benefit beyond normal support from

the unpaid liability.    Respondent gave petitioner the benefit of

this factor.

     Based on our review of the record, we find that respondent

did not abuse his discretion in concluding that petitioner was
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entitled to full relief from the joint and several 1994 income

tax liability.

     Reviewed and adopted as the report of the Small Tax Case

Division.

                                           Decision will be entered

                                      for petitioner.
