                            T.C. Memo. 2009-52



                          UNITED STATES TAX COURT



                     ROSE MARIE SUNLEAF, Petitioner v.
               COMMISSIONER OF INTERNAL REVENUE, Respondent



        Docket No. 12380-05.                Filed March 11, 2009.



        Timothy J. Krumm, for petitioner.

     Michael W. Bitner, for respondent.



                  MEMORANDUM FINDINGS OF FACT AND OPINION


        VASQUEZ, Judge:    This case arises from a request for relief

under section 6015(f)1 with respect to petitioner’s 2000 taxable

year.       The issues for decision are:   (1) Whether our review is

limited to the administrative record as of the date respondent’s


        1
        Unless otherwise indicated, all section references are to
the Internal Revenue Code.
                                 - 2 -

determination denying petitioner’s request for section 6015

relief was issued; and (2) whether respondent abused his

discretion in denying petitioner relief under section 6015(f) for

2000.

                           FINDINGS OF FACT

I.   Procedural Background

      Petitioner is the widow of Roger W. Sunleaf (Mr. Sunleaf),

who died on September 14, 2003.    After Mr. Sunleaf’s death

petitioner discovered he had not been paying their joint Federal

income taxes or Federal employment taxes, and they owed the

Internal Revenue Service (IRS) $131,494.30.    Of this amount

approximately $106,268.31 was from underpayments, including

interest and penalties, of Federal income tax for the years 1993,

1994, 1995, 1996, and 2000.

      Petitioner requested section 6015 relief.   Petitioner

submitted to the IRS Form 8857, Request for Innocent Spouse

Relief, dated April 26, 2004; Form 12510, Questionnaire for

Requesting Spouse, dated April 26, 2004; and an undated letter

explaining her circumstances and the reasons she was entitled to

relief pursuant to section 6015.

      Respondent denied petitioner section 6015(f) relief in an

October 1, 2004, letter.     Respondent’s workpapers showed that he

denied section 6015(f) relief for 2000 because petitioner’s claim

was not timely.   Respondent claimed the first collection activity
                               - 3 -

with respect to the liability for 2000 was made on July 16, 2001,

and petitioner’s request for section 6015(f) relief was untimely

because it was made more than 2 years from the first collection

activity. Petitioner filed a Form 12509, Statement of

Disagreement, on November 1, 2004.

      In a letter dated February 7, 2005, respondent informed

petitioner that he was reconsidering petitioner’s request for

section 6015(f) relief for 2000.    In a final determination dated

April 13, 2005, respondent denied petitioner’s request for

section 6015(f) relief for 2000 on the ground, among others, that

petitioner did not have reason to believe at the time the return

was filed that the tax would be paid by Mr. Sunleaf.

      Petitioner petitioned this Court on July 6, 2005, requesting

section 6015(f) relief for 2000.    At the time of filing her

petition, petitioner resided in Iowa.    As of December 31, 2007,

the amount of the 2000 tax liability in dispute was $9,505.53;

$5,413 is the amount of the underpayment and $4,092.53 is the

amount of interest and penalties.

II.   Substantive Background

      Petitioner and Mr. Sunleaf timely filed a joint income tax

return for 2000.   Mr. Sunleaf prepared the 2000 return, which

petitioner signed without prior review.    It was Mr. Sunleaf’s

practice to fill out the couple’s income tax return and present

it to petitioner for her signature a few minutes before the post
                                - 4 -

office closed on the day the return was due.   This practice

prevented petitioner from reviewing their 2000 joint income tax

return because she was rushed and pressured into signing the

return.

     Petitioner was 70 years old at the time of trial (February

27, 2008).    She and Mr. Sunleaf were married in 1965 and lived in

Montezuma, Iowa, for approximately 40 years.   At the time of

trial, the population of Montezuma was approximately 1,400.

Petitioner graduated from Finley Hospital Nursing School and

worked as a nurse until 1966 when a back injury forced her to

stop working.   She lost her certification as a nurse in 2004.

Mr. Sunleaf graduated from the University of Iowa School of Law

in 1963, started working as an attorney in Montezuma, and worked

as an attorney in Montezuma for the duration of his life.

     Petitioner and Mr. Sunleaf had a wonderful life together.

Mr. Sunleaf worked in his law practice, and petitioner took care

of the family home.

     Petitioner and Mr. Sunleaf had a joint checking account.

Petitioner never saw the bank statements for this account and

used the account only rarely when Mr. Sunleaf gave petitioner a

check to buy something for the house.   The joint account was

managed by Mr. Sunleaf and primarily used to pay for the expenses

he handled.
                               - 5 -

     During their marriage petitioner had a personal bank account

she used to pay for Christmas presents and later (once she

started to receive Social Security benefits) to pay for groceries

and prescription drugs.   The money in petitioner’s personal

account came from gifts to petitioner from her family and from

Social Security benefits.   The expenses for groceries and drugs

usually used up petitioner’s Social Security benefits.

     When she signed the joint income tax return for 2000,

petitioner was unaware of any financial problems she and Mr.

Sunleaf may have had.   Petitioner was unaware of whether Mr.

Sunleaf ever borrowed any money.   Mr. Sunleaf did not speak to

petitioner about money and finances.   When the topic of taxes

came up, Mr. Sunleaf told petitioner he would handle it, and

petitioner did not ask any questions about the joint tax returns.

     Shortly after Mr. Sunleaf’s death, his former secretary

contacted the coexecutor of Mr. Sunleaf’s estate (petitioner’s

niece) about alerting petitioner to her poor financial condition.

Mr. Sunleaf’s former secretary had worked for him for 15 years

and knew Mr. Sunleaf was in trouble with the IRS and with the

family finances.   Petitioner was unaware of the financial

situation while Mr. Sunleaf was alive because he swore his

secretaries to secrecy, and he handled nearly all of the family’s

financial affairs.
                                 - 6 -

     When petitioner learned of the financial mess that Mr.

Sunleaf had caused, she was shocked.     At the time of his death,

Mr. Sunleaf’s office, his desk, floor, chairs, and conference

table were piled with mail.   There were unopened envelopes from

creditors, the IRS, and banks.

     Mr. Sunleaf was able to keep petitioner unaware of the

financial mess because all mail addressed to petitioner and Mr.

Sunleaf was delivered to the post office in Montezuma instead of

their home.   Petitioner never picked up the mail at the post

office; rather, Mr. Sunleaf picked up the mail and brought home

only magazines and personal letters.

     The gross value of Mr. Sunleaf’s estate was $226,261.      In

the probate of Mr. Sunleaf’s estate, judgments, liens, and claims

of approximately $295,045.90 were filed, which included amounts

owed to the IRS.   The amounts owed to the IRS were the result of

a combination of income and employment taxes, penalties, and

interest, dating back to 1993.    Before Mr. Sunleaf’s death,

petitioner was never aware any money was owed to the IRS.

     For reasons unknown to petitioner, before his death Mr.

Sunleaf had transferred the titles to his office building, a

Cadillac motor vehicle, a Corvette motor vehicle, and an MG motor

vehicle to petitioner’s name.    At the time of Mr. Sunleaf’s

death, the office building’s estimated fair market value was

$40,000, the Cadillac’s estimated fair market value was $200, the
                                - 7 -

Corvette’s estimated fair market value was unknown, and the MG’s

estimated fair market value was $1,500.    The laws of Iowa

provided that petitioner was already half-owner of petitioner’s

and Mr. Sunleaf’s family home and accordingly, only half of the

home was included in Mr. Sunleaf’s estate.    The approximate value

of half of the family home was $125,000, with an approximate

equity interest of $80,000.    The estate of Mr. Sunleaf is not

closed.    Petitioner is expected to receive nothing from Mr.

Sunleaf’s estate.

     Petitioner submitted a “Statement of Financial Condition and

Other Information” dated January 31, 2008, which detailed

petitioner’s financial condition after much of Mr. Sunleaf’s

estate had been settled.    In the course of liquidating Mr.

Sunleaf’s estate to pay the judgments, liens, and claims against

the estate, petitioner and the coexecutor of Mr. Sunleaf’s estate

made the following transactions:

     •    Sold Mr. Sunleaf’s office building and used all the

          proceeds to pay the lender that had a mortgage on the

          building.

     •    Sold the Corvette and used all the proceeds to pay the

          debts which were a lien on the title of the vehicle.

     •    Hired an attorney to attempt to get possession of the

          MG motor vehicle because the storage provider alleges
                            - 8 -

    Mr. Sunleaf did not pay him for storage, and the storage

    provider is owed money.

•   Sold petitioner’s and Mr. Sunleaf’s home in Montezuma,

    Iowa, to pay debts.   Half of the proceeds went to Mr.

    Sunleaf’s estate and half went to petitioner.   The half

    that went to Mr. Sunleaf’s estate was used to pay

    creditors of the estate and Federal employment taxes.

    In order to get the IRS to allow petitioner to sell the

    home, petitioner agreed to have her share of the net

    proceeds placed in an escrow account.   The amount in the

    escrow account (approximately $80,000) is significantly

    less than the Federal tax liens placed on that amount

    (approximately $108,261.30).    Petitioner will not receive

    anything from the escrow account.

•   Petitioner purchased and moved into manufactured housing

    in July 2007 for $28,500.   There is an outstanding

    mortgage of $25,000 on the manufactured home; petitioner

    pays $451 per month for the mortgage and $175 per

    month in lot rent.    Petitioner’s niece took out a second

    mortgage on her home to pay petitioner’s downpayment of

    $5,000 on the manufactured home.

•   Petitioner sold a piano that was a gift from her father

    when she was 13, a Cushman vehicle, and a lawnmower,

    and used the proceeds to purchase a used Cadillac for
                                 - 9 -

         $6,000 to replace her old Cadillac (which had over

         300,000 miles on it).

     •   Petitioner sold $1,884.45 in miscellaneous personal

         items and furniture.

     On the Form 12510, petitioner listed the income and expenses

as follows:

          Income                            Expenses

Annuity          $246.68         Rent or mortgage         $400.00
Social Security 1,359.00           (temporarily reduced)
  Total        $1,605.68         Food                      200.00
                                 Utilities                 234.00
                                 Telephone                  40.00
                                 Auto licensing              8.00
                                 Auto insurance             52.00
                                 Auto gas & repairs         75.00
                                 Medical insurance         295.40
                                 Life insurance              5.00
                                 Clothing                   60.00
                                 Other (vet, household
                                   repairs, real estate
                                   taxes, home
                                   insurance & church)     369.00
                                   Total                $1,738.40

Petitioner’s income will decrease by $246.68 to $1,359 when the

annuity providing her with income ends in 2009 or 2010.     By the

time of trial the amount petitioner pays in mortgage and rent for

her mobile home space had increased to a total of $626.     However,

petitioner’s real estate taxes had decreased after her move to a

mobile home and were $194 annually instead of $3,150 annually.2


     2
        Petitioner listed a combined monthly “other” expense of
$369 that included real estate taxes and reported the annual
amount as $3,150. This was a monthly real estate tax expense of
                                                   (continued...)
                              - 10 -

Taking into account the increased amount of her mortgage and her

lot rent and the decreased amount of her real estate taxes,

petitioner’s monthly expenses are $1,718.07.3   This exceeds her

present monthly income by $112.39 and will exceed her projected

decreased monthly income in 2009 or 2010 by $359.07.

                              OPINION

I.   Scope of Review

      Respondent argues that when the Court determines whether

petitioner is entitled to section 6015(f) relief for 2000, the

Court is limited to the administrative record and may not

consider evidence introduced at trial that was not included in

the administrative record.   We disagree.

      In Porter v. Commissioner, 130 T.C. 115 (2008), we recently

addressed the aforementioned issue of the scope of our review in

section 6015(f) cases.   For the reasons stated in Porter, when

the Court determines whether a taxpayer is entitled to section

6015(f) relief the Court’s determination is made in a trial de

novo and the Court is not limited to the administrative record;


      2
      (...continued)
$262.50. Petitioner reported real estate taxes of $97 on her
mobile home are paid semiannually. This equals a monthly expense
of $16.17.
      3
        Mortgage and lot rent $626, plus food $200, plus
utilities $234, plus telephone $40, plus auto licensing $8, plus
auto insurance $52, plus auto gas and repairs $75, plus medical
insurance $295.40, plus life insurance $5, plus clothing $60,
plus other (vet, household repairs, real estate taxes, home
insurance, and church) $122.67 equals $1,718.07.
                                - 11 -

i.e., the Court may consider evidence and matters at trial which

were not part of the administrative record.     Porter v.

Commissioner, supra.

II.   Section 6015(f) Relief

      Section 6015(f) allows relief to a requesting spouse “if–-

(1) taking into account all the facts and circumstances, it is

inequitable to hold the individual liable”.     The Commissioner

applies Rev. Proc. 2003-61,4 sec. 4.01, 2003-2 C.B. 296, 297, to

determine whether a taxpayer has met the threshold requirements

to submit a request for equitable relief.     Rev. Proc. 2003-61,

sec. 4.02, 2003-2 C.B. at 298, provides conditions under which

the IRS will ordinarily grant equitable relief from an

underpayment of income tax reported on a joint return.

      A.   Eligibility:   Rev. Proc. 2003-61, Sec. 4.01

      There are seven threshold conditions that all requesting

spouses must meet in order for the Commissioner to grant relief

pursuant to section 6015(f).     Respondent concedes that petitioner

meets the requirements set forth in Rev. Proc. 2003-61, sec.

4.01(1)-(7).



      4
        Rev. Proc. 2003-61, 2003-2 C.B. 296, superseded Rev.
Proc. 2000-15, 2000-1 C.B. 447. Rev. Proc. 2003-61, supra,
applies to requests for relief filed on or after Nov. 1, 2003, or
those pending on Nov. 1, 2003, for which no preliminary
determination letter has been issued as of that date. Id. sec.
7, 2003-2 C.B. at 299. On Apr. 26, 2004, petitioner filed for
relief. Accordingly, we apply Rev. Proc. 2003-61, supra, to this
case.
                                - 12 -

     B.   Safe Harbor:   Rev. Proc. 2003-61, Sec. 4.02

     Rev. Proc. 2003-61, supra, has a safe harbor whereby the

Commissioner ordinarily will grant relief pursuant to section

6015(f) (safe harbor).     Stolkin v. Commissioner, T.C. Memo. 2008-

211; Gonce v. Commissioner, T.C. Memo. 2007-328; Billings v.

Commissioner, T.C. Memo. 2007-234; Rev. Proc. 2003-61, sec. 4.02,

(titled “Circumstances under which the Service ordinarily will

grant equitable relief under section 6015(f) with respect to

underpayments on joint returns.”).       The safe harbor allows relief

to a requesting spouse if the requesting spouse meets three

conditions.5   See Stolkin v. Commissioner, supra; Rev. Proc.

2003-61, sec. 4.02.

                1.    First Safe Harbor Condition

     The first safe harbor condition is:

     On the date of the request for relief, the requesting spouse
     is no longer married to, or is legally separated from, the
     nonrequesting spouse, or has not been a member of the same
     household as the nonrequesting spouse at any time during the



     5
        Relief that the Commissioner ordinarily grants pursuant
Rev. Proc. 2003-61, sec. 4.02(1), 2003-2 C.B. at 298, is subject
to the limitation set forth in Rev. Proc. 2003-61, sec. 4.02(2),
2003-2 C.B. at 298: “If the Service adjusts the joint return to
reflect an understatement of income tax, relief will be available
only to the extent of the income tax liability shown on the joint
return prior to the Service’s adjustment.” Respondent did not
address Rev. Proc. 2003-61, sec. 4.02(2), on brief. In any event
it does not appear that the tax reported on the return has
undergone adjustment. Accordingly, we deem respondent has waived
any issue regarding Rev. Proc. 2003-61, sec. 4.02(2). See
Petzoldt v. Commissioner, 92 T.C. 661, 683 (1989); Alioto v.
Commissioner, T.C. Memo. 2008-185.
                                - 13 -

     12-month period ending on the date of the request for
     relief.

Rev. Proc. 2003-61, sec. 4.02(1)(a).     Mr. Sunleaf died September

14, 2003, and petitioner was widowed when she made her request

for relief.    Petitioner’s status of being a widow is “tantamount

to her being separated or divorced.”     See Rosenthal v.

Commissioner, T.C. Memo. 2004-89.    Respondent has conceded that

petitioner meets this condition, and accordingly, we conclude

that petitioner satisfied the first safe harbor condition.

                 2.   Second Safe Harbor Condition

     The second safe harbor condition is:

     On the date the requesting spouse signed the joint return,
     the requesting spouse had no knowledge or reason to know
     that the nonrequesting spouse would not pay the income tax
     liability. The requesting spouse must establish that it was
     reasonable for the requesting spouse to believe that the
     nonrequesting spouse would pay the reported income tax
     liability. If a requesting spouse would otherwise qualify
     for relief under this section, except for the fact that the
     requesting spouse’s lack of knowledge or reason to know
     relates only to a portion of the unpaid income tax
     liability, then the requesting spouse may receive relief to
     the extent that the income tax liability is attributable to
     that portion.

Rev. Proc. 2003-61, sec. 4.02(1)(b).     This factor is satisfied if

the taxpayer reasonably believed when the return was filed that

the liability would be paid by the taxpayer’s spouse.       See Alioto

v. Commissioner, T.C. Memo. 2008-185; Rev. Proc. 2003-61, sec.

4.02(1)(b).6


     6
         In Alioto v. Commissioner, T.C. Memo. 2008-185, the
                                                    (continued...)
                              - 14 -

     Respondent argues petitioner did not prove that when the

2000 return was signed, she knew or had reason to believe Mr.

Sunleaf would pay the tax shown on their return for 2000.

Respondent argues that petitioner had constructive knowledge of

the underpayment simply by signing the 2000 income tax return and

that petitioner had a duty of inquiry with respect to the

contents of the return.

     Petitioner credibly testified that she did not learn about

the 2000 tax liabilities until after Mr. Sunleaf’s death in 2003

and that she was not aware of tax problems or any financial

matters before then.   Petitioner found notices from the IRS

regarding tax liabilities unopened and stacked with other

unopened mail at Mr. Sunleaf’s office.   All mail which could have

alerted petitioner to tax problems and financial trouble was

delivered to a post office box and picked up by Mr. Sunleaf.

Petitioner received only the mail Mr. Sunleaf brought home, and

he did not tell petitioner about their tax problems and financial

trouble.

     Under the circumstances, petitioner’s belief that Mr.

Sunleaf would pay the 2000 tax liability was reasonable.    Mr.


     6
      (...continued)
taxpayer was subject to Rev. Proc. 2000-15, supra, and subject to
the safe harbor in sec. 4.02 of that revenue procedure. Rev.
Proc. 2000-15, supra, was superseded by Rev. Proc. 2003-61,
supra; however, Rev. Proc. 2003-61, supra, did not materially
change the safe harbor in Rev. Proc. 2000-15, sec. 4.02.
Accordingly, the analysis in Alioto is relevant.
                              - 15 -

Sunleaf had handled the couple’s finances and taxes for

approximately 38 years (from their marriage in 1965 until his

death in 2003).   Petitioner and Mr. Sunleaf had “a wonderful

life” together, and petitioner was completely unaware of tax

problems and financial trouble.   When petitioner signed the 2000

tax return, there were no circumstances present that would have

indicated that it was unreasonable for petitioner to believe Mr.

Sunleaf would pay the tax liability due.   See Stolkin v.

Commissioner, T.C. Memo. 2008-211 (where it was not reasonable

for the taxpayer to think Mr. Stolkin would pay the taxes due

only 4 months after filing for bankruptcy); Gonce v.

Commissioner, T.C. Memo. 2007-328 (where taxpayer knew Mr. Gonce

had always bought on credit and that she and Mr. Gonce spent more

than they made, the taxpayer had not shown it was reasonable to

rely on Mr. Gonce to pay the taxes due for those years).    It is

petitioner’s complete lack of knowledge regarding tax and

financial matters that persuades us that petitioner’s belief that

Mr. Sunleaf would pay the tax liability reported on their joint

2000 income tax return was reasonable.   See Stolkin v.

Commissioner, supra (“Moreover, we have consistently found that a

requesting spouse’s knowledge of the couple’s financial

difficulties deprives the requesting spouse of reason to believe

that his or her ex-spouse will pay the tax liability.”).

Additionally, Mr. Sunleaf’s assurances that he would handle the
                               - 16 -

taxes and finances strengthens the reasonableness of petitioner’s

belief that Mr. Sunleaf would pay the tax liability due for 2000.

In Keitz v. Commissioner, T.C. Memo. 2004-74, we found the

taxpayer’s belief that Mr. Keitz would pay the tax liability

reasonable where Mr. Keitz had constantly assured the taxpayer

that their taxes would be paid.   Similarly, petitioner’s belief

that Mr. Sunleaf would pay the 2000 tax liability is reasonable

because of Mr. Sunleaf’s assurances that he would handle it.

     The combination of petitioner’s complete lack of knowledge

of their tax and financial matters and Mr. Sunleaf’s assurances

to petitioner leads us to conclude that petitioner, at the time

she signed the return, had no knowledge or reason to know that

the taxes would not be paid.   Rather, petitioner reasonably

believed when the return was filed that the liability would be

paid by Mr. Sunleaf.

     We reject respondent’s argument that petitioner has not

proven that when the 2000 return was signed, she knew or had

reason to believe that Mr. Sunleaf would pay the tax shown on

their return for 2000.    See Alioto v. Commissioner, supra; Van

Arsdalen v. Commissioner, T.C. Memo. 2007-48; Wiest v.

Commissioner, T.C. Memo. 2003-91.

     We reject respondent’s argument that petitioner possessed

constructive knowledge.   In a similar factual scenario, where a

spouse had assumed responsibility for preparing and filing the
                                 - 17 -

return, we concluded the fact that the taxpayer signed the return

did not establish the constructive knowledge that is relevant in

the case of a liability that is reported on a return but not

paid.     Wiest v. Commissioner, supra (if signing a joint return

that reports a liability is sufficient to establish actual or

constructive knowledge of an underpayment, then no taxpayer

signing such a joint return would ever lack knowledge or reason

to know of the underpayment).

        We reject respondent’s argument that petitioner failed to

fulfill a duty of inquiry because at the time petitioner signed

the return, she did not know or have reason to know that the tax

due would not be paid.     See Keitz v. Commissioner, supra

(taxpayer did not know or have reason to know when the joint

return was signed that tax would be unpaid, where taxpayer had no

involvement in her husband’s business, husband had their return

prepared, and husband constantly assured taxpayer that their

taxes would be paid).

        We conclude that petitioner has satisfied this condition.

                  3.   Third Safe Harbor Condition

        The third safe harbor condition is:

        The requesting spouse will suffer economic hardship if the
        Service does not grant relief. For purposes of this revenue
        procedure, the Service will base its determination of
        whether the requesting spouse will suffer economic hardship
        on rules similar to those provided in Treas. Reg.
        § 301.6343-1(b)(4). * * *

Rev. Proc. 2003-61, sec. 4.02(1)(c).
                                - 18 -

     Generally, economic hardship exists if collection of the tax

liability will cause the taxpayer to be unable to pay reasonable

basic living expenses.     Alioto v. Commissioner, T.C. Memo. 2008-

185; Butner v. Commissioner, T.C. Memo. 2007-136.      The ability to

pay reasonable basic living expenses is determined by considering

the following nonexclusive factors:      (1) The taxpayer’s age,

employment status and history, ability to earn, and number of

dependents; (2) an amount reasonably necessary for food,

clothing, housing, medical expenses, transportation, current tax

payments, and expenses necessary to the taxpayer’s production of

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

(4) the amount of property available to satisfy the taxpayer’s

expenses; (5) any extraordinary circumstances; i.e., special

education expenses, a medical catastrophe, or a natural disaster;

and (6) any other factor bearing on economic hardship.      Sec.

301.6343-1(b)(4), Proced. & Admin. Regs.; see Gonce v.

Commissioner, supra; Van Arsdalen v. Commissioner, supra.      These

provisions envision consideration of a taxpayer’s retirement

needs where appropriate.     Van Arsdalen v. Commissioner, supra.

     Petitioner is 70 years old.    She is disabled and is unable

to work as a nurse.   Unlike other taxpayers who have filed for

relief and been able to earn money working or had the option of

returning to the workforce, petitioner has a disability that

forecloses the option of her returning to work as a nurse.      See
                              - 19 -

Stolkin v. Commissioner, T.C. Memo. 2008-211 (where taxpayer was

receiving $4,500 in monthly spousal support and $1,000 per month

in salary); George v. Commissioner, T.C. Memo. 2004-261 (where

taxpayer had retired, but had been considering a return to the

workforce to resume her teaching career, the Court found that the

taxpayer posited no reason why she could not be expected to earn

income comparable to the salary in the last year she worked full-

time); Keitz v. Commissioner, T.C. Memo. 2004-74 (where taxpayer

earned $25,689 annually and received approximately $1,600 per

month in alimony and child support).    Because of petitioner’s

inability to return to the workforce, her case is distinguishable

from those of Stolkin, George, and Keitz, where this Court found

the requesting taxpayer would not suffer economic hardship if

relief was not granted.

     Rather than having sufficient monthly income to meet her

monthly expenses, petitioner had monthly expenses that exceeded

her monthly income at the time she initially filed for relief

and, even after significant lifestyle changes, have continued to

exceed her monthly income.   We are satisfied that the expenses

petitioner listed are reasonable basic living expenses.    Similar

to the taxpayer in Alioto, petitioner sold her home to use the

proceeds to pay down her debt upon discovering the financial mess

her deceased husband had concealed.    Petitioner has moved to a

different town, sold her home, and purchased a mobile home worth
                                - 20 -

approximately 10 percent of the value of her former home in an

attempt to raise money to pay down the debts.     Also like the

taxpayer in Alioto, petitioner will not inherit anything from her

husband’s estate.    Further, petitioner’s monthly income will

decrease to approximately $1,359 (the amount of her monthly

Social Security benefits) when the annuity she inherited ends.

     Petitioner’s lack of disposable income distinguishes her

request for relief from other requests where this Court has found

that no economic hardship would occur if the taxpayer was not

awarded relief.     In both Stolkin and Keitz, this Court noted the

amount of disposable income available to each requesting taxpayer

before finding that neither taxpayer would suffer economic

hardship if relief was not granted.      Stolkin v. Commissioner,

supra (the taxpayer had approximately $600 per month in

disposable income); Keitz v. Commissioner, supra (the taxpayer

had approximately $920 per month in disposable income).

     Despite expenses exceeding her income, petitioner is

managing to support herself each month.     The expenses listed do

not suggest a lifestyle that is extravagant or lavish.     See

Stolkin v. Commissioner, supra (taxpayer’s monthly expenses

included $600 monthly lease payments on a BMW).     After careful

consideration, we conclude collection of the tax liability will

cause petitioner to be unable to pay reasonable basic living

expenses.   Accordingly, petitioner will suffer economic hardship
                               - 21 -

if relief is denied, and the third condition of the safe harbor

has been met.

III.   Conclusion

       Petitioner satisfies the safe harbor conditions in Rev.

Proc. 2003-61, sec. 4.02.    Accordingly, petitioner is entitled to

section 6015(f) relief.

       To reflect the foregoing,


                                          Decision will be entered

                                     for petitioner.
