                  T.C. Summary Opinion 2009-170



                     UNITED STATES TAX COURT



                 ARIANEL TORRES, Petitioner, AND
                   FRANZ HURTADO, Intervenor v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 3759-06S.                Filed November 23, 2009.



     Arianel Torres, pro se.

     Franz Hurtado, pro se.

     Daniel W. Layton, for respondent.



     CARLUZZO, Special Trial Judge:   This case was heard

pursuant to the provisions of section 7463.1   Pursuant to section

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



     1
      Unless otherwise indicated, section references are to the
Internal Revenue Code of 1986, as amended, in effect for the
relevant period.
                                - 2 -

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

any other case.

     In a final notice of determination dated December 1, 2005,

respondent denied petitioner’s claim for section 6015 relief with

respect to the joint and several liability arising from the 2000

joint Federal income tax return filed by petitioner and

intervenor (the 2000 joint return).     According to that notice,

relief was denied because petitioner was not eligible for section

6015(b) or (c) relief, and she did not qualify for equitable

relief under section 6015(f).   Intervenor opposes allowing

petitioner any section 6015 relief.     Because the tax liability

from which petitioner seeks relief results from an underpayment

of the tax liability shown on the 2000 joint return, petitioner

does not qualify for relief under section 6015(b) or (c).     That

being so, we further consider and discuss only whether petitioner

is entitled to relief under section 6015(f).

                           Background

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

At the time the petition was filed, petitioner and intervenor

resided at separate addresses in California.

     Petitioner and intervenor were married in August 1996, they

separated in August 2001, and were divorced in May 2003.     They
                                - 3 -

have one child.    During the first 3 years of their marriage

petitioner lived in Mexico and intervenor lived in California.

They filed joint Federal income tax returns for taxable years

1996 through 2000.

       In 1996 petitioner purchased a parcel of land in Mexico.

She paid for it in installments from income earned while employed

in Mexico.    Petitioner made the final payment sometime during

1998.

       In 1999 petitioner purchased a condominium in Mexico.    At

the time of this purchase petitioner was unemployed.    Some of the

mortgage payments for the condominium were made through

withdrawals from intervenor’s bank account, to which petitioner

had limited access.

       In December 1999 petitioner moved from her condominium in

Mexico to her mother’s home in California.    Shortly thereafter,

in February 2000, petitioner moved in with intervenor.    At that

time petitioner was unemployed and intervenor worked for Yahoo!,

Inc.

       In connection with their divorce, petitioner and intervenor

entered into a “Marital Settlement Agreement” (the agreement),

effective as of April 1, 2003, which was incorporated into the

divorce decree.    The agreement addresses Federal income tax
                               - 4 -

notices and audits but does not specify which spouse would be

responsible for any unpaid income tax for 2000.

     On April 14, 2003, petitioner and intervenor signed and

filed the 2000 joint return after respondent notified them that a

substitute for return was being prepared for that year.    The 2000

joint return shows income of $71,6842 and an income tax liability

of $9,459, of which $6,243 was unpaid.   Some of the income shown

on the return was used to purchase a used car for petitioner,

some was used to make a loan to petitioner’s mother, some was

used to make mortgage payments on petitioner’s condominium in

Mexico, and some was available to and used for unspecified

purposes by petitioner’s father.

     In August 2004 petitioner timely submitted a Form 8857,

Request for Innocent Spouse Relief (request for relief), and Form

12510, Questionnaire for Requesting Spouse (questionnaire).

Petitioner stated on her questionnaire that she did not sign the

2000 joint return and that she did not have access to

intervenor’s bank account.   Both allegations are inconsistent

with testimony and other evidence presented at trial, and

petitioner concedes that she was mistaken on her questionnaire.

     In the final notice of determination respondent denied

petitioner’s request for relief on the grounds that she:



     2
      Intervenor prepared the 2000 joint return. All of the
income reported on the return is attributable to him.
                                - 5 -

(1) Failed to establish a reasonable belief the tax liability

reported on the return would be paid; (2) failed to establish

that she would suffer economic hardship if not relieved of the

tax liability; and (3) benefited significantly from the unpaid

tax liability.

     At the time petitioner filed her petition she was a student

at San Jose State and employed full time as a diet clerk at a

hospital in San Jose.   Her education was financed in part through

student loans.

                             Discussion

I.   Introduction

     In general, married taxpayers may elect to file a joint

Federal income tax return.   Sec. 6013(a).   After making the

election for a year, each spouse is jointly and severally liable

for the entire Federal income tax liability assessed for that

year, whether as reported on the joint return or subsequently

determined to be due.   Sec. 6013(d)(3); see sec. 1.6013-4(b),

Income Tax Regs.    Subject to various conditions and in a variety

of ways set forth in section 6015, an individual who has made a

joint return with his or her spouse for a year may seek relief

from the joint and several liability arising from that joint

return.

     A taxpayer who does not qualify for relief under section

6015(b) or (c) may be relieved from joint and several liability
                                 - 6 -

pursuant to section 6015(f) if, taking into account all the facts

and circumstances, it would be inequitable to hold the taxpayer

liable for any unpaid tax or deficiency.

II.     Section 6015(f) Relief

        We review, de novo, petitioner’s entitlement to relief under

section 6015(f).     See Porter v. Commissioner, 132 T.C. ___

(2009).

        The Commissioner has issued revenue procedures listing

factors to be considered in determining whether relief should be

granted under section 6015(f).     Rev. Proc. 2003-61, 2003-2 C.B.

296, modifying and superseding Rev. Proc. 2000-15, 2000-1 C.B.

447.3

        Rev. Proc. 2003-61, sec. 4.01, 2003-2 C.B. at 297, sets

forth threshold conditions that individuals seeking relief under

section 6015(f) must satisfy.     Respondent concedes that

petitioner satisfies the threshold conditions.

        Where the requesting spouse satisfies the threshold

requirements of Rev. Proc. 2003-61, sec. 4.01, then Rev. Proc.

2003-61, sec. 4.02, 2003-2 C.B. at 298, sets forth circumstances

in which relief will ordinarily be granted under section 6015(f)

with respect to an underpayment of a properly reported liability.

To qualify for relief under Rev. Proc. 2003-61, sec. 4.02(1),


        3
      The guidelines set forth in Rev. Proc. 2003-61, 2003-2 C.B.
296, are effective for requests for relief filed, as in this
case, on or after Nov. 1, 2003. Id. sec. 7, 2003-2 C.B. at 299.
                               - 7 -

2003-2 C.B. at 298, the spouse seeking relief must:    (1) No

longer be married to, be legally separated from, or not have been

a member of the same household of the other spouse at any time

during the 12-month period ending on the date of the request for

relief; (2) have had no knowledge or reason to know when the

spouse seeking relief signed the return that the other spouse

would not pay the tax liability; and (3) suffer economic hardship

if relief is not granted.   The parties dispute whether petitioner

would suffer economic hardship if her request for relief were not

granted.

     Generally, economic hardship exists if collection of the tax

liability will cause the spouse seeking relief to be unable to

pay his or her reasonable basic living expenses.     Butner v.

Commissioner, T.C. Memo. 2007-136.     The following nonexclusive

factors to be considered in determining whether the spouse

seeking relief can pay reasonable basic living expenses are set

forth in section 301.6343-1(b)(4), Proced. & Admin. Regs.:       (1)

The age, employment status and history, ability to earn, and

number of dependents of the spouse seeking relief; (2) an amount

reasonably necessary for food, clothing, housing, medical

expenses, transportation, current tax payments, and expenses

necessary to the production of income for the spouse seeking

relief; (3) the cost of living in the geographic area of the

spouse seeking relief; (4) the amount of property available to
                                   - 8 -

satisfy the expenses of the spouse seeking relief; (5) any

extraordinary circumstances; e.g., special education expenses, a

medical catastrophe, or a natural disaster; and (6) any other

factor bearing on economic hardship.

       Petitioner contends that she is unable to pay the tax

liability because her monthly income barely covers her monthly

expenses.4      She testified that she had accrued approximately

$50,000 in student loans and was financially responsible for her

son.       Petitioner offered no documentation to substantiate her

monthly income and/or expenses.       Furthermore, at trial she

claimed an additional $300 in monthly expenses that was not

claimed on her questionnaire.

       The lack of receipts, bills, or other statements

substantiating petitioner’s claimed expenses makes it difficult

to determine the types of expenses accounted for, whether the

expenses were reasonable, and whether her estimates of those

expenditures are, in fact, accurate.

       A copy of a schedule of petitioner’s assets and debts

submitted to the Superior Court of California, County of Santa

Clara, was introduced into evidence in this case.       That schedule

shows $17,200 in assets, encumbered by $8,800.       Included in the

list of assets is the parcel of land she purchased in Mexico in



       4
      Petitioner testified that her monthly income of $1,600
equaled her monthly expenses.
                                 - 9 -

1996 ($4,000), the condominium she purchased in Mexico in 1999

($9,000), and the used car she purchased in 2000 ($3,500).

Petitioner also claimed $43,050 in debts on that schedule,

including student loans ($27,000) and credit cards ($15,300).

According to the schedule, petitioner pays $563 a month towards

the satisfaction of her debts.

     Considering the foregoing, and taking into account the

factors set forth in section 301.6343-1(b)(4), Proced. & Admin.

Regs., we conclude that the satisfaction of the tax liability in

issue will not cause petitioner to be unable to pay basic living

expenses.   Therefore, we conclude that petitioner would not

suffer economic hardship if relief were not granted.

     Where, as here, a spouse fails to qualify under Rev. Proc.

2003-61, sec. 4.02, relief may be granted under Rev. Proc. 2003-

61, sec. 4.03, 2003-2 C.B. at 298.       A nonexhaustive list of

factors to be considered when determining whether to grant

equitable relief under section 6015(f) is contained in Rev. Proc.

2003-61, sec. 4.03.   Those factors are:      (1) Marital status; (2)

economic hardship; (3) whether the spouse seeking relief knew or

had reason to know that the other spouse would not pay the income

tax liability; (4) the other spouse’s legal obligation to pay the

tax liability; (5) whether the spouse seeking relief obtained a

significant benefit from the nonpayment of the tax liability; and

(6) whether the spouse seeking relief complied with Federal
                                  - 10 -

income tax laws.     We address below the application of the

foregoing factors to the facts and circumstances of the instant

case.

     A. Marital Status

        Under Rev. Proc. 2003-61, sec. 4.03(2)(a)(i), 2003-2 C.B. at

298, consideration is given to whether the spouse seeking relief

is separated or divorced from his or her spouse.      Petitioner and

intervenor were separated in August 2001 and were divorced in May

2003.     Petitioner filed her claim for relief on August 28, 2004.

The marital status factor favors relief.

        B. Economic Hardship

        Under Rev. Proc. 2003-61, sec. 4.03(2)(a)(ii), 2003-2 C.B.

at 298, consideration is given to whether the spouse seeking

relief would be unable to pay reasonable basic living expenses if

relief were not granted.       As previously discussed, petitioner has

failed to establish that she would be unable to pay reasonable

basic living expenses if section 6015(f) relief were not granted.

This factor weighs against relief.

        C. Knowledge or Reason To Know

        Under Rev. Proc. 2003-61, sec. 4.03(2)(a)(iii), 2003-2 C.B.

at 298, consideration is given to whether the spouse seeking

relief knew or had reason to know that the other spouse would

not pay the liability.     Respondent concedes that petitioner was
                              - 11 -

unaware of any tax liability due at the time she signed the 2000

joint return.   This factor also favors relief.

     D. Legal Obligation of Other Spouse

     Under Rev. Proc. 2003-61, sec. 4.03(2)(a)(iv), 2003-2 C.B.

at 298, consideration is given to whether the other spouse has a

legal obligation to pay the outstanding income tax liability

pursuant to a divorce decree or an agreement.     The agreement is

silent with regard to whether petitioner or intervenor is

responsible for the 2000 income tax liability.    Accordingly, this

factor is neutral.   See Washington v. Commissioner, 120 T.C. 137,

148-149 (2003).

     E. Significant Benefit

     Under Rev. Proc. 2003-61, sec. 4.03(2)(a)(v), 2003-2 C.B. at

299, consideration is given to whether the spouse seeking relief

significantly benefited (beyond normal support) from the unpaid

income tax liability.   If so, the significant benefit factor

weighs against granting equitable relief.

     It is clear that some of the income that gave rise to the

unpaid 2000 tax liability inured to the benefit of petitioner.

At least some portion of the unpaid liability was used to make a

loan to petitioner’s mother, some was used to purchase a used car

for petitioner, and some was used by petitioner’s father.

Furthermore it appears that at least some portion of the income

reported on the 2000 joint return was used by petitioner to pay
                               - 12 -

the mortgage on her condominium in Mexico and her school tuition.

The facts and circumstances presented strongly suggest that

petitioner received a significant benefit from the failure to pay

the tax.   Accordingly, this factor also weighs against relief.

     F. Petitioner’s Compliance With Federal Income Tax Laws

     Under Rev. Proc. 2003-61, sec. 4.03(2)(a)(vi), 2003-2 C.B.

at 299, consideration is given to whether the spouse seeking

relief is in compliance with her income tax obligations.

Respondent concedes that petitioner is in compliance with her

Federal income tax obligations in the taxable years following the

taxable year in issue, and therefore, the compliance factor

favors relief.    See Harris v. Commissioner, T.C. Memo. 2009-26.

     Three factors weigh in favor of relief, two factors weigh

against relief, and three factors are neutral.      Although the

decision is close, the significant benefit factor and the

economic hardship factor constrain us to conclude that it would

not be inequitable to hold petitioner liable for the income tax

liability arising from the 2000 joint return.      Therefore, with

respect to that year, petitioner is not entitled to section

6015(f) relief.

     To reflect the foregoing,


                                      Decision will be entered

                                 for respondent.
