                    T.C. Summary Opinion 2007-124



                       UNITED STATES TAX COURT



                 VICTORIA K.M. FREULICH, Petitioner v.
             COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 21827-05S.              Filed July 23, 2007.



     Victoria K.M. Freulich, pro se.

     Robert V. Boeshaar, for respondent.


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

the provisions of section 7463 of the Internal Revenue Code.

Unless otherwise indicated, all section references are to the

Internal Revenue Code in effect for the year at issue, and all

Rule references are to the Tax Court Rules of Practice and

Procedure.    Pursuant to section 7463(b), the decision to be

entered is not reviewable by any other court, and this opinion

shall not be treated as precedent for any other case.
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     Respondent determined for 2003 a deficiency in petitioner’s

Federal income tax of $505 and an accuracy-related penalty of

$101.    Petitioner concedes the deficiency and penalty in this

case.    The issues for decision are whether petitioner is entitled

to relief under section 6015(b) or (c) and whether respondent’s

determination that petitioner is not entitled to relief under

section 6015(f) is an abuse of discretion.

                             Background

     The stipulation of facts and the exhibits received into

evidence are incorporated herein by reference.    At the time the

petition in this case was filed, petitioner resided in Auburn,

Washington.

        Petitioner and her husband, now deceased, electronically

filed a joint Form 1040, U.S. Individual Income Tax Return, for

2003.    Petitioner worked as a cook for the Muckleshoot Indian

Nation Casino (Casino), where she also gambled.    In 2003,

petitioner won $5,000 at the Casino for which she received a Form

W2-G, Certain Gambling Winnings.    The gambling winnings were

deposited into petitioner and her husband’s joint bank account.

She did not report the income to her return preparer.

     During 2003, petitioner also failed to report as income

interest of $27 and dividends of $17.

     Petitioner’s husband passed away on September 19, 2004.

Petitioner filed her Form 12510, Questionnaire for Requesting
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Spouse (Used in Conjunction with Form 8857, Request for Innocent

Spouse Relief) on May 22, 2006.   Respondent evaluated her request

for relief and determined that petitioner is not entitled to

relief from joint and several liability for the deficiency and

penalty.

                             Discussion

Relief From Joint and Several Liability Under Section 6015

     Generally, married taxpayers may elect to file a joint

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 may seek relief from

joint and several liability under section 6015(b), or if

eligible, may allocate liability for the item giving rise to the

deficiency under section 6015(c) .

     Where an individual elects to have section 6015(b) or (c)

apply, or in the case of an individual who requests equitable

relief under section 6015(f), section 6015(e) gives jurisdiction

to the Court “to determine the appropriate relief available to

the individual under this section”.

     Except as otherwise provided in section 6015, the taxpayer

bears the burden of proof to show her entitlement to relief.

Rule 142(a); Alt v. Commissioner, 119 T.C. 306, 311 (2002), affd.

101 Fed. Appx. 34 (6th Cir. 2004).
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     Relief Under Section 6015(b)

     Section 6015(b) provides relief from joint and several

liability for tax (including interest, penalties, and other

amounts) to the extent that such liability is attributable to an

understatement of tax.   To be eligible for relief, the requesting

spouse must satisfy the following five elements of section

6015(b)(1):

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

                 (B) on such return there is an
          understatement of tax attributable to 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 [makes a valid
          election] * * *.

     Respondent concedes that petitioner has satisfied the

requirements under subparagraphs (A) and (B) of section

6015(b)(1).   At issue are the requirements under subparagraphs

(C), (D), and (E) of section 6015(b)(1).
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     Although there is, under section 6015(b)(1)(B), an

understatement of tax attributable to the erroneous items1 of “one

individual”, petitioner, “the other individual”, her deceased

husband, would be the one entitled to make the election under

section 6015(b)(1)(E), not petitioner.   In addition, under

section 6015(b)(1)(C), the requesting spouse must establish that

in signing the return, he or she did not know or have reason to

know of the understatement.

     Petitioner agrees that she knew that she had received the

gambling winnings and omitted interest and dividend income.

Petitioner contends, merely, that she “forgot to include the

items on her return.”

     Where a spouse seeking relief has actual knowledge of the

underlying transaction that produced the omitted income, innocent

spouse relief is denied.   Cheshire v. Commissioner, 115 T.C. 183,

192-193 (2000), affd. 282 F.3d 326 (5th Cir. 2002).

     Since the items that were omitted were the income items of

petitioner herself, it would not be inequitable to hold her

liable for the understatement under section 6015(b)(1)(D).

     The Court finds that petitioner has failed to satisfy the

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

petitioner is not entitled to relief under section 6015(b).




     1
      See sec. 1.6015-1(h)(4), Income Tax Regs., Erroneous Item.
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       Relief Under Section 6015(c)

       Section 6015(c) allows proportionate tax relief (if a timely

election is made) through allocation of the deficiency between

individuals who filed a joint return and are no longer married,

are legally separated, or have been living apart for a 12-month

period.

       Petitioner’s husband passed away before she received the

statutory notice of deficiency and filed her election for relief

under section 6015.    A widow or widower is treated as a taxpayer

who is no longer married.    See Jonson v. Commissioner, 118 T.C.

106, 124 (2002), affd. 353 F.3d 1181 (10th Cir. 2003).

Therefore, petitioner is eligible to elect the application of

section 6015(c).

       Relief under section 6015(c), however, is not available if

respondent demonstrates that the requesting spouse had actual

knowledge, at the time the return was signed, of any item giving

rise to a deficiency (or portion thereof) that is not allocable

to such individual.    Sec. 6015(c)(3)(C); Hopkins v. Commissioner,

121 T.C. 73, 86 (2003); Cheshire v. Commissioner, supra at 193-

194.    The knowledge requirement under section 6015(c)(3)(C) does

not require the requesting spouse to possess actual knowledge of

the tax consequences arising from the item giving rise to the

deficiency.    Hopkins v. Commissioner, supra at 86; Cheshire v.

Commissioner, supra at 194; sec. 1.6015-3(c)(2), Income Tax Regs.
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Rather, the statute mandates only a showing that the requesting

spouse actually knew of the item on the return that gave rise to

the deficiency (or portion thereof), without regard as to whether

he knew of the tax consequences.    Mitchell v. Commissioner, 292

F.3d 800, 805 (D.C. Cir. 2002), affg. T.C. Memo. 2000-332;

Cheshire v. Commissioner, supra.

     The items giving rise to the deficiency are the gambling

winnings and dividend and interest income of petitioner, the

actual knowledge of which she admits.   Therefore, petitioner is

not entitled to relief under section 6015(c).

     Relief Under Section 6015(f)

     Section 6015(f) grants the Commissioner discretion to

relieve an individual, where relief is not available under

section 6015(b) or (c), from joint liability if taking into

account all the facts and circumstances, it is inequitable to

hold the individual liable for any unpaid tax or deficiency.

Sec. 6015(f).   A requesting spouse bears the burden of proving

that the Commissioner abused his discretion in denying the spouse

equitable relief from joint liability under section 6015(f).

Jonson v. Commissioner, supra at 114; Cheshire v. Commissioner,

supra at 198; Butler v. Commissioner, 114 T.C. 276, 292 (2000).

     As previously discussed, petitioner is not entitled to

relief under section 6015(b) or (c).    The parties dispute whether

it is inequitable to hold petitioner liable for the 2003
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deficiency.

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

prescribed guidelines in Rev. Proc. 2003-61 to be used in

determining whether an individual qualifies for relief under that

section.2   Rev. Proc. 2003-61, sec. 4.01, 2003-2 C.B. 296, 297,

sets forth seven threshold conditions that must be satisfied

before the Commissioner will consider a request for equitable

relief under section 6015(f).

     Condition seven of Rev. Proc. 2003-61, sec. 4.01, requires

that the income tax liability from which the requesting spouse

seeks relief is attributable to an item of the “nonrequesting

spouse”, i.e. petitioner’s husband, unless one of the enumerated

exceptions applies.   None of the exceptions apply to petitioner.

     Petitioner is therefore not entitled to relief under section

6015(f).    Respondent’s determination that petitioner is not

entitled to relief under section 6015(f) is not an abuse of

discretion.




     2
      Rev. Proc. 2003-61, 2003-2 C.B. 296, supersedes Rev. Proc.
2000-15, 2000-1 C.B. 447. The guidelines set forth in Rev. Proc.
2003-61, supra, are effective for requests for relief filed on or
after Nov. 1, 2003, and for requests for relief pending as of
Nov. 1, 2003, for which no preliminary determination letter has
been issued as of Nov. 1, 2003. Rev. Proc. 2003-61, sec. 7,
2003-2 C.B. at 299.
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     The Court holds that respondent did not err in denying

petitioner relief from joint and several liability under section

6015(b), (c), and (f) for the amounts set forth in his notice of

deficiency dated August 22, 2005.

     To reflect the foregoing,

                                          Decision will be entered

                                     for respondent.
