                        T.C. Memo. 2004-230



                      UNITED STATES TAX COURT



                 WENDLYN H. ALBIN, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 17605-02.              Filed October 12, 2004.



     Wendlyn H. Albin, pro se.1

     Steven M. Roth, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     LARO, Judge:   Petitioner petitioned the Court under section

6015(e) for relief from joint and several Federal income tax




     1
       Sidney J. Machtinger represented petitioner from the time
of the petition, Nov. 12, 2002, until his withdrawal on Feb. 4,
2004.
                               - 2 -

liabilities for 1983, 1984, 1985, and 1986.2   Respondent

determined that petitioner was not entitled to any relief under

section 6015, and we decide whether to sustain that

determination.   We hold we shall.

                         FINDINGS OF FACT

     Some facts were stipulated and are so found.   The

stipulations of fact and the accompanying exhibits are

incorporated herein by this reference.   Petitioner resided in San

Marino, California, when her petition to this Court was filed.

     Petitioner is a college educated woman who as a licensed

realtor earned $18,000 in real estate commissions in 2002.   At

the time of trial, she and her husband, John E. Albin (Albin),

were living on Social Security, rental income, and income that

she earned working 14 hours per week at a retail outlet.    She and

Albin (collectively, the Albins) have been happily married and

living together at all relevant times, and during that time he

was neither evasive nor deceitful to her as to their finances.

     The Albins filed joint 1983, 1984, 1985, and 1986 Forms

1040, U.S. Individual Income Tax Return, that were prepared by

Albin’s accountant in consultation with Albin.   Petitioner was

not involved in the preparation of these returns.   Albin, outside

the accountant’s presence, presented each of these returns to


     2
       Unless otherwise indicated, section references are to the
applicable versions of the Internal Revenue Code. Rule
references are to the Tax Court Rules of Practice and Procedure.
                                - 3 -

petitioner for her signature, and she signed all of the returns

without reading or examining any part of them.   She also did not

ask Albin, or receive from him, any question as to any item or

amount that appeared on the returns.

      In or about December 1982, Albin invested in a tax shelter

(shelter) that was in the form of a limited partnership named

York Leasing Associates.   The understatements in issue stem from

tax deficiencies resulting from that shelter and, more

specifically, the Albins’ reporting of losses for the subject

years of $340,244, $249,398, $129,232, and $58,995, respectively,

that the shelter passed through to Albin in his capacity as one

of its partners.   Exclusive of these losses, the Albins reported

on their 1983 through 1986 tax returns total income (primarily

from the salary Albin received from a company he owned) of

$322,727, $225,496, $282,557, and $338,243, respectively.    With

those losses, the Albins reported that they had relatively little

or no Federal income tax liability and that they were entitled to

refunds of almost all of the Federal income taxes withheld from

Albin’s salary.3   Albin spent the taxes that the Albins would


      3
         The Albins reported on their 1984 return that they had no
tax   liability and $17,062 of tax withheld from Albin’s salary.
The   Albins reported on their 1985 return that they had a $12,656
tax   liability and $25,425 of tax withheld from Albin’s salary.
The   Albins reported on their 1986 return that they had an $891
tax   liability and $14,716 of tax withheld from Albin’s salary.
The   stipulated copy of the Albins’ 1983 return does not contain
the   page on which they reported their tax liability and withheld
                                                     (continued...)
                               - 4 -

have paid, but for the claimed losses, on items of benefit to

both of the Albins.   Each loss that the Albins reported from the

shelter was later substantially reduced by respondent upon audit,

resulting in a large tax deficiency in each subject year.

     On or about December 13, 2000, petitioner filed with

respondent a Form 8857, Request for Innocent Spouse Relief

(request).   This request was reviewed by Robert Cipriotti

(Cipriotti), an officer in respondent’s Office of Appeals

(Appeals), after the request was denied by respondent’s

“compliance” division.   Cipriotti applied the principles of Rev.

Proc. 2000-15, 2000—1 C.B. 447, to the request and recommended in

his report dated August 13, 2000, that the request be denied.    On

August 21, 2002, Appeals issued to petitioner a notice of

determination stating that petitioner’s request was denied

because, respondent determined, petitioner was not eligible for

relief under any of the provisions of section 6015.

     On January 10, 2003, the Albins sold for $925,000 a house

that they had purchased in 1968 for $53,500.   Respondent received

$564,194.67 of the sale proceeds pursuant to a tax lien that

respondent had filed as to petitioner’s income tax liabilities

for the subject years.   Afterwards, as of December 31, 2003,




     3
      (...continued)
tax. The portions of the 1983 return which are in evidence
indicate that the Albins reported no tax liability for 1983.
                                 - 5 -

petitioners continued to owe $804,407.53 of taxes for the subject

years.

     The Albins currently have approximately $825,000 of equity

in a home that they own in Dana Point, California (Dana Point).4

They use that home personally and do not rent it to others.     The

Albins also currently own three pieces of rental real estate in

Whittier, California, which they purchased in June 1979,

March 1979, and December 1985, respectively, for $85,000,

$62,500, and $115,000, respectively.5    In 2003, the Albins’

equity in the rental properties totaled approximately $350,000.

The Albins currently lease all three of these rental properties

and, in 2002, they received $49,200 of gross rent and reported

net rental income of $19,618.6

     The Albins also currently own a second home, their primary

residence, which they bought in 1987 for $410,000, with a cash

downpayment of $200,000.   This second home collateralizes a home

equity loan that the Albins received in 1995 and used to finance




     4
       Petitioner admits in her brief that the Albins purchased
this home in Dana Point in 1986.
     5
       Petitioner admits in her brief that the Albins purchased
the last of those three rental properties by making a $20,000
cash downpayment.
     6
       The Albins also realized $13,848 of income in 1992 from
their interests in two partnerships and one S corporation. One
of these two partnerships was registered with the Commissioner as
a tax shelter.
                                - 6 -

Albin’s purchase of a company that manufactures and distributes

“turbos”.

                               OPINION

      Spouses filing a joint Federal income tax return are

generally jointly and severally liable for the tax shown on the

return or found to be owing.   Sec. 6013(d)(3); Butler v.

Commissioner, 114 T.C. 276, 282 (2000).    In certain cases,

however, an individual filing a joint return may avoid joint and

several liability for tax (including interest, penalties, and

other amounts) by qualifying for relief under section 6015.    The

three types of relief prescribed in that section are:   (1) Full

or apportioned relief under section 6015(b) (full/apportioned

relief), (2) proportionate relief under section 6015(c)

(proportionate relief), and (3) equitable relief under section

6015(f) (equitable relief).    Petitioner claims entitlement to one

or all of these types of relief.   Except as otherwise provided in

section 6015, petitioner bears the burden of proving that claim.

See Alt v. Commissioner, 119 T.C. 306, 311 (2002), affd. 101 Fed.

Appx. 34 (6th Cir. 2004); see also Rule 142(a)(1).

1.   Full/Apportioned Relief

      Section 6015(b) provides relief from joint and several

liability to the extent that the liability is attributable to an

understatement of tax.   In order to be eligible for this relief,
                                 - 7 -

a requesting spouse needs to 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 1 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 [timely] elects (in such
     form as the Secretary may prescribe) the benefits of
     this subsection * * *.

The requesting spouse’s failure to meet any one of these

requirements prevents him or her from qualifying for

full/apportioned relief.     Alt v. Commissioner, supra at 313.

     Respondent focuses on subparagraphs (C) and (D) of section

6015(b)(1) and argues that petitioner meets neither of these

requirements.     We consider only the first of these two

subparagraphs in that we agree with respondent that it has not

been met.     As to that first subparagraph, subparagraph (C), the

Court of Appeals for the Ninth Circuit, the court to which an

appeal of this case lies, has held that a spouse such as

petitioner has “reason to know” of an understatement if a

reasonably prudent taxpayer in her position when she signed the
                                 - 8 -

return could have been expected to know that the return contained

the understatement.7   Price v. Commissioner, 887 F.2d 959, 965

(9th Cir. 1989).8   Whether such a taxpayer has reason to know of

an understatement is a subjective test that rests on factors such

as the taxpayer’s level of education, the taxpayer’s involvement

in the family’s business and financial affairs, the evasiveness

or deceit of the taxpayer’s spouse as to the couple’s finances,

and the presence of any unusual or lavish expenditures

inconsistent with the couple’s past levels of income, standard of

living, and spending patterns.     Id.   The court in Price also

stated that this “reason to know” requirement may impose on the

requesting spouse a “duty of inquiry” that would put that spouse

on notice that an understatement exists.      Id.   The test for

whether this duty of inquiry requirement applies is the same

subjective test that is used to determine whether the requesting

spouse had reason to know of the understatement; i.e., in an

erroneous deduction setting, whether a reasonably prudent

taxpayer in the position of the requesting spouse would be led to



     7
       Respondent makes no claim that petitioner actually knew
about the understatement or the shelter and deductions related
thereto.
     8
       Although the knowledge requirement in Price v.
Commissioner, 887 F.2d 959, 965 (9th Cir. 1989), was that of
former sec. 6013(e)(1)(E), we have held that interpretations of
the former provision are instructive to our interpretation of the
knowledge requirement of sec. 6015(b)(1)(C). Butler v.
Commissioner, 114 T.C. 276, 283 (2000).
                               - 9 -

question the legitimacy of the deduction, or his or her tax

liability in general.   Id. at 965-966; see also Guth v.

Commissioner, 797 F.2d 441, 445 (9th Cir. 1990), affg. T.C. Memo.

1987-522.   If the requesting spouse is aware of sufficient facts

to put that spouse on notice as to the possibility of an

understatement, the duty of inquiry arises, which, if not

satisfied, may cause that spouse to be treated as having

constructive knowledge of the understatement.   Price v.

Commissioner, supra at 965; see also Guth v. Commissioner, supra

at 445.

     We believe that petitioner had reason to know of the

understatement in each subject year.   While in each of those

years the Albins reported a large amount of income (but for the

shelter loss), a large loss (i.e., from the shelter), and

relatively little or no tax liability, petitioner was unconcerned

about her tax obligation and took no steps to assure herself that

the subject returns were filed properly.   She did not read the

returns or even ask to see any of the records related thereto.

A reasonably prudent person in the position of petitioner, a

college educated individual, would have at least looked at the

face and signature page of each return (i.e., the front and back

of Form 1040), eyed the clearly reported items of income, loss

(from the shelter) and minimal or no tax liability, and inquired

as to the loss (from the shelter), the minimal or no tax
                               - 10 -

liability, and the amount of the claimed refund before signing

the return.   Such is especially true given the extraordinarily

large amount of income (but for the shelter loss) realized by the

Albins in each subject year and the fact that Albin was neither

evasive nor deceitful with petitioner as to their finances.9    See

Reser v. Commissioner, 112 F.3d 1258, 1267-1268 (5th Cir. 1997)

(“Tax returns setting forth ‘dramatic deductions’ will generally

put a reasonable taxpayer on notice that further investigation is

warranted.    A spouse who has a duty to inquire but fails to do so

may be charged with constructive knowledge of the substantial

understatement and thus precluded from obtaining innocent spouse

relief.”   (Fn. ref. omitted.)), affg. in part and revg. in part

T.C. Memo. 1995-572; Hayman v. Commissioner, 992 F.2d 1256, 1262

(2d Cir. 1993) (“Tax returns setting forth large deductions, such

as tax shelter losses offsetting income from other sources and

substantially reducing or eliminating the couple’s tax liability,

generally put a taxpayer on notice that there may be an

understatement of tax liability.”), affg. T.C. Memo. 1992-228;

Levin v. Commissioner, T.C. Memo. 1987-67 (spouse requesting

relief from joint and several liability had a duty to inquire



     9
       We believe that the reasonable taxpayer in the position of
petitioner also would have been mindful that the Albins were able
to own and maintain various pieces of real estate during the
subject years and were able to accumulate a significant amount of
cash to use in 1987 as a downpayment on their now primary
residence.
                              - 11 -

about large deductions reported on the face of her joint return

and was unable to escape her tax responsibilities by ignoring the

contents of the return when signing it); see also Mora v.

Commissioner, 117 T.C. 279, 289 (2001); cf. Price v.

Commissioner, supra at 965-966 (spouse entitled to relief under

former section 6013(e) where she questioned her husband about the

erroneous deduction and he took advantage of her lack of

understanding of their financial affairs and misled her as to the

contents of the return by assuring her that the deduction was

proper).   Petitioner could easily have discussed the contents of

the subject returns with Albin at or before the time that she

signed them.   He did not coerce her into signing them, nor did he

exercise undue influence over her with respect to their financial

affairs.   See Adams v. Commissioner, 60 T.C. 300, 303 (1973).     As

the Court stated in a similar setting in Levin v. Commissioner,

supra:

     a spouse cannot obtain the benefits of section 6013(e)
     [the predecessor to section 6015] by simply turning a
     blind eye to–-by preferring not to know of–-facts fully
     disclosed on a return, of such a large nature as would
     reasonably put such spouse on notice that further
     inquiry would need to be made. * * *

     Petitioner argues that she was unsophisticated as to

financial matters and that she signed each subject return on the

basis of her trust in Albin and his accountant to prepare the

returns correctly.   Petitioner argues that she did not have any

duty of inquiry in that she did not know what to inquire about.
                              - 12 -

Petitioner points the Court to Guth v. Commissioner, supra,

Price v. Commissioner, 887 F.2d 959 (9th Cir. 1989); Laird v.

Commissioner, T.C. Memo. 1994-564, and Estate of Killian v.

Commissioner, T.C. Memo. 1987-365, and argues that those cases

support her request for relief.   We disagree.

     First, although a requesting spouse’s lack of involvement in

family finances is one fact that may support a claim of relief

from joint and several liability under section 6015, that fact

standing alone may not always be enough for the spouse to receive

that relief.   See Price v. Commissioner, supra at 443-444;

Stevens v. Commissioner, 872 F.2d 1499, 1507 (11th Cir. 1989),

affg. T.C. Memo. 1988-63; see also Hayman v. Commissioner, supra

at 1262 (requesting spouse was not relieved of her duty of

inquiry merely because she relied upon her husband to take care

of their tax returns); Jonson v. Commissioner, 118 T.C. 106,

119-120 (2002) (section 6015 relief unavailable where requesting

spouse did not establish that her husband concealed or attempted

to deceive her concerning couple’s financial affairs, and

requesting spouse had access to financial files), affd. 353 F.3d

1181 (10th Cir. 2003); Levin v. Commissioner, supra (taxpayer who

signed a blank joint return and then failed to inquire into her

tax liability as to that return turned a “blind eye” to that

liability and, thus, did not qualify for relief from joint and

several liability).
                              - 13 -

     Second, the fact that petitioner may have been

unsophisticated about business matters in general, or tax

shelters in particular, does not on the record before us relieve

her of a duty of inquiry as to her tax liabilities.    Hayman v.

Commissioner, supra at 1262; Levin v. Commissioner, supra.

Petitioner would clearly have seen, had she read the face of each

subject return, that the Albins were reporting large amounts of

income along with a large loss.   She also would have clearly

seen, had she read the back of each page, that the Albins were

claiming that they owed little or no tax and were entitled to

significant refunds.   Petitioner could have easily questioned

Albin as to the minimal or no tax in light of the large amounts

of income.   Petitioner, however, opted not to read any part of

the returns or question Albin as to the returns.   Instead, like

the taxpayer in Levin, petitioner turned a “blind eye” to her

Federal income tax liabilities for the subject years.10

     Third, the referenced cases upon which petitioner relies are

all factually distinguishable from the case at hand.   Each of

those cases, unlike this one, generally involved a controlling

husband who misled, deceived, or hid things from his wife as to

their financial affairs.   In Guth v. Commissioner, 797 F.2d at


     10
       Petitioner asserts in her brief that the use of the
phrase “turning a blind eye” either denotes or connotes
fraudulent behavior on her part. We disagree. We use that
phrase to mean that petitioner preferred not to concern herself
at all as to her Federal income tax liabilities.
                                - 14 -

442, the requesting spouse was told by her husband to sign their

joint tax returns, and he controlled the couple’s finances and

was evasive and deceitful with respect to those finances.    In

Price v. Commissioner, supra, the requesting spouse reviewed her

joint return, spotted the disputed deductions, and questioned her

husband about them.    The husband misled the requesting spouse on

the validity of the deductions.    In Laird v. Commissioner, supra,

the requesting spouse asked her husband about his tax shelter

programs but was ordered by him without any explanation to sign

their joint returns.   The husband also coerced and intimidated

the requesting spouse both physically and mentally.    In Estate of

Killian v. Commissioner, supra, the requesting spouse reviewed

her joint return, spotted an $11,756 claimed refund, and

questioned her husband about it.    The husband misled the

requesting spouse as to the source of the refund.

      We conclude that petitioner had “reason to know” of each

understatement at hand within the meaning of section

6015(b)(1)(C) when she signed those returns.    Accordingly, we

hold that petitioner is not entitled to full/apportioned relief

for any of the subject years.

2.   Proportionate Relief

      Section 6015(c) allows a qualifying individual who has filed

a joint return to receive proportionate relief from the joint

liability that would otherwise relate to that return.    In order
                              - 15 -

to qualify for proportionate relief, an individual requesting

such relief must at the time of the request be divorced or

legally separated from the other individual who had joined in the

joint return (nonrequesting spouse) or, alternatively, must not

have been a member of the same household as the nonrequesting

spouse during any part of the 12-month period ending on the date

of the request.   See sec. 6015(c)(1)(3)(A)(i).

      Petitioner argues in her brief that she is entitled to

proportionate relief for all of the subject years.    The parties

have stipulated, however, that petitioner is not entitled to

proportionate relief for any of the subject years.    Given the

additional fact that petitioner and Albin were married, not

separated, and members of the same household during all relevant

times, we hold that petitioner is not entitled to proportionate

relief for any of the subject years.

3.   Equitable Relief

      Section 6015(f) provides:

           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);
           and

                (2) relief is not available to such
           individual under subsection (b) or (c),

      the Secretary may relieve such individual of such
      liability.
                               - 16 -

This section grants the Commissioner discretion to grant

equitable relief to any individual who files a joint return and

who is not entitled to either full/apportioned relief or

proportionate relief.   Because we have held that petitioner is

not entitled to either full/apportioned relief or proportionate

relief for any of the subject years, we consider whether

petitioner is entitled to equitable relief for one or all of

those years.

     Our determination of whether petitioner is in fact entitled

to equitable relief, in whole or in part, is made on the basis of

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

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

122 T.C. 32, 44, (2004).    Whereas respondent denied petitioner’s

claim to equitable relief, petitioner bears the burden of proving

that this action was an abuse of respondent’s discretion.     See

Washington v. Commissioner, 120 T.C. 137, 146 (2003); Cheshire v.

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

Cir. 2002).    In order to prevail, petitioner must demonstrate

that respondent exercised his discretion arbitrarily,

capriciously, or without sound basis in fact or law when he

denied her the requested equitable relief.    See Jonson v.

Commissioner, 118 T.C. at 125.

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

prescribed guidelines under which a taxpayer may qualify for
                              - 17 -

equitable relief.   See Rev. Proc. 2000-15, 2000—1 C.B. 447.11

Petitioner takes no exception to respondent’s use of these

guidelines to decide whether she qualifies for equitable relief.

Under these guidelines, a taxpayer such as petitioner must meet

seven threshold conditions before the Commissioner will consider

her request for equitable relief.    See Rev. Proc. 2000-15, sec.

4.01, 2000-1 C.B. at 448.   Respondent concedes that petitioner

has met these conditions.

     Rev. Proc. 2000-15, sec. 4.02, 2000-1 C.B. at 448, lists the

circumstances in which the Commissioner will ordinarily grant

equitable relief as to unpaid liabilities reported on a joint

return.   Those circumstances are:

          (a) At the time relief is requested, 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 12-month
     period ending on the date relief was requested;

          (b) At the time the return was signed, the
     requesting spouse had no knowledge or reason to know
     that the tax would not be paid. The requesting spouse
     must establish that it was reasonable for the
     requesting spouse to believe that the nonrequesting
     spouse would pay the reported liability. * * *; and



     11
       Rev. Proc. 2000-15, 2000-1 C.B. 447, has been superseded
by Rev. Proc. 2003-61, 2003-32 I.R.B. 296, effective for requests
for relief filed on or after Nov. 1, 2003, and for requests for
such relief which were pending on, and for which no preliminary
determination letter had been issued as of, that date. Given
that Appeals in this case issued the notice of determination to
petitioner on Aug. 21, 2002, we conclude that this case is
controlled by Rev. Proc. 2000-15, supra.
                               - 18 -

          (c) The requesting spouse will suffer economic
     hardship if relief is not granted. For purposes of this
     section, the determination of whether a requesting
     spouse will suffer economic hardship will be made by
     the Commissioner or the Commissioner’s delegate, and
     will be based on rules similar to those provided in §
     301.6343-1(b)(4) of the Regulations on Procedure and
     Administration. [Id.]

Because this case concerns liabilities for deficiencies, and not

unpaid liabilities reported on a joint return, Rev. Proc.

2000-15, sec. 4.02, does not apply.     See Mellen v. Commissioner,

T.C. Memo. 2002-280.12

     Where, as here, the requesting spouse does not qualify for

relief under Rev. Proc. 2000-15, sec. 4.02, the Commissioner may

still grant that spouse relief under Rev. Proc. 2000-15, sec.

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

factors which the Commissioner will consider in deciding whether

to grant equitable relief.   Rev. Proc. 2000-15, sec. 4.03(3)(1),

lists the following six positive factors which weigh in favor of

granting equitable relief:

          (a) Marital status. The requesting spouse is
     separated * * * or divorced from the nonrequesting
     spouse.

          (b) Economic hardship. The requesting spouse
     would suffer economic hardship (within the meaning of
     section 4.02(1)(c) of this revenue procedure) if relief
     from the liability is not granted.


     12
       Petitioner also fails the requirement of this section
that she and Albin be either (1) divorced or legally separated at
the time of the requested relief or (2) members of different
households at any times during the 12-month period before that
request.
                             - 19 -


          (c) Abuse. The requesting spouse was abused by
     the nonrequesting spouse, but such abuse did not amount
     to duress.

          (d) No knowledge or reason to know. In the case
     of a liability that was properly reported but not paid,
     the requesting spouse did not know and had no reason to
     know that the liability would not be paid. In the case
     of a liability that arose from a deficiency, the
     requesting spouse did not know and had no reason to
     know of the items giving rise to the deficiency.

          (e) Nonrequesting spouse’s legal obligation. The
     nonrequesting spouse has a legal obligation pursuant to
     a divorce decree or agreement to pay the outstanding
     liability. This will not be a factor weighing in favor
     of relief if the requesting spouse knew or had reason
     to know, at the time the divorce decree or agreement
     was entered into, that the nonrequesting spouse would
     not pay the liability.

          (f) Attributable to nonrequesting spouse.   The
     liability for which relief is sought 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 negative factors which weigh against granting

equitable relief:

          (a) Attributable to the requesting spouse. The
     unpaid liability or item giving rise to the deficiency
     is attributable to the requesting spouse.

          (b) Knowledge, or reason to know. A requesting
     spouse knew or had reason to know of the item giving
     rise to a deficiency or that the reported liability
     would be unpaid at the time the return was signed.
     This is an extremely strong factor weighing against
     relief. Nonetheless, when the factors in favor of
     equitable relief are unusually strong, it may be
     appropriate to grant relief under § 6015(f) in limited
     situations where a requesting spouse knew or had reason
     to know that the liability would not be paid, and in
     very limited situations where the requesting spouse
                              - 20 -

     knew or had reason to know of an item giving rise to a
     deficiency.

          (c) Significant benefit. The requesting spouse
     has significantly benefitted (beyond normal support)
     from the unpaid liability or items giving rise to the
     deficiency. See § 1.6013-5(b).

          (d) Lack of economic hardship. The requesting
     spouse will not experience economic hardship (within
     the meaning of section 4.02(1)(c) of this revenue
     procedure) if relief from the liability is not granted.

          (e) Noncompliance with federal income tax laws.
     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.

          (f) Requesting spouse’s legal obligation. The
     requesting spouse has a legal obligation pursuant to a
     divorce decree or agreement to pay the liability.

These positive and negative factors are not exhaustive, and none

of them is decisive in and of itself.   All factors must be

considered and weighed appropriately.   Id.

     We proceed to consider the 12 listed factors seriatim and

then to consider whether any unlisted factor is also applicable

to this case.   Neither party disputes that the knowledge or

reason to know factor, the economic hardship factor, and the

legal obligation factor in Rev. Proc. 2000-15, sec. 4.03(2)(b),

(d), and (f), respectively, are the opposites of the knowledge or

reason to know factor, the economic hardship factor, and the

legal obligation factor in Rev. Proc. 2000-15, sec. 4.03(1)(d),

(b), and (e), respectively.   Nor does either party dispute that

the attribution factor in Rev. Proc. 2000-15, sec. 4.03(2)(a), is
                                   - 21 -

essentially the opposite of the attribution factor in Rev. Proc.

2000-15, sec. 4.03(1)(f),

     a.   Positive Factors

            i.    Marital Status

     Petitioner does not claim that this factor favors her

position.    Nor do we find that such is the case.   Petitioner is

neither separated nor divorced from Albin.    We hold that this

factor does not weigh in favor of granting equitable relief to

petitioner for any of the subject years.    Because Rev. Proc.

2000-15, supra, states that this factor will only serve to weigh

in favor of granting relief when it is met, and fails to state

that this factor will weigh against granting relief when it is

not met, we consider this factor neutral.

            ii.    Economic Hardship

     Petitioner argues that she will suffer economic hardship if

equitable relief is not granted to her for each of the subject

years.    Petitioner argues that a decision adverse to her in this

case will force her to sell all of her assets so that she may pay

the liabilities in issue and may even result in her incurring a

new liability for taxes due on any capital gain that she realizes

on the sale.

     In determining whether a requesting spouse will suffer

economic hardship, Rev. Proc. 2000-15, sec. 4.02(1)(c), to which

Rev. Proc. 2000-15, sec. 4.03(1)(b), refers, requires reliance on
                              - 22 -

rules similar to those contained in section 301.6343-1(b)(4),

Proced. & Admin. Regs.   Section 301.6343-1(b)(4)(i), Proced. &

Admin. Regs., generally states that an individual suffers an

economic hardship if the individual is unable to pay his or her

reasonable basic living expenses.   Section 301.6343-1(b)(4),

Proced. & Admin. Regs., states in pertinent part:

          (ii) Information from taxpayer. In determining a
     reasonable amount for basic living expenses the
     director will consider any information provided by the
     taxpayer including–

               (A) The taxpayer’s age, employment
          status and history, ability to earn, number
          of dependents, and status as a dependent of
          someone else;

               (B) The amount reasonably necessary for
          food, clothing, housing (including utilities,
          home-owner insurance, home-owner dues, and
          the like), medical expenses (including health
          insurance), transportation, current tax
          payments (including federal, state, and
          local), alimony, child support, or other
          court-ordered payments, and expenses
          necessary to the taxpayer’s production of
          income (such as dues for a trade union or
          professional organization, or child care
          payments which allow the taxpayer to be
          gainfully employed);

               (C) The cost of living in the geographic
          area in which the taxpayer resides;

               (D) The amount of property exempt from
          levy which is available to pay the taxpayer’s
          expenses;

               (E) Any extraordinary circumstances such
          as special education expenses, a medical
          catastrophe, or natural disaster; and
                              - 23 -

               (F) Any other factor that the taxpayer
          claims bears on economic hardship and brings
          to the attention of the director.

     Petitioner has presented little or no evidence of her

current financial situation, such as her current salary, her

basic living expenses, or the amounts of her other debts.    Nor

has petitioner presented any evidence as to the nature and amount

of her basic living expenses which she will be unable to pay if

she is not granted her requested relief.    On the record before

us, we conclude that petitioner has failed to carry her burden of

establishing within the context of section 301.6343-1(b)(4),

Proced. & Admin. Regs., (1) her basic living expenses, and (2)

that any expenses which she considers to be basic living expenses

are “reasonable”.   We also conclude that petitioner has failed to

carry her burden of establishing that she would suffer an

economic hardship if the Court were to deny her equitable relief

and that she has failed to carry her burden of establishing that

the economic hardship factor in Rev. Proc. 2000-15, sec.

4.03(1)(b), is present in this case.   We conclude that this

factor does not weigh in favor of granting equitable relief to

petitioner for any of the subject years.    Because Rev. Proc.

2000-15, supra, states that this factor will only serve to weigh

in favor of granting relief when it is met, and fails to state

that this factor will weigh against granting relief when it is

not met, we consider this factor neutral.
                                  - 24 -

            iii.   Abuse

     Petitioner does not claim that this factor favors her

position.    Nor do we find that such is the case.    The record does

not establish that petitioner was abused by Albin in any regard.

We hold that this factor does not weigh in favor of granting

equitable relief to petitioner for any of the subject years.

Because Rev. Proc. 2000-15, supra, states that this factor will

only serve to weigh in favor of granting relief when it is met,

and fails to state that this factor will weigh against granting

relief when it is not met, we consider this factor neutral.

                   iv.   No Knowledge or Reason To Know

     Petitioner’s liabilities in issue arose from deficiencies.

Petitioner argues that she did not know and had no reason to know

of the items giving rise to those deficiencies.      As mentioned

above, respondent makes no claim that petitioner actually knew

about the understatement or the shelter and deductions related

thereto.

     The parties do not dispute that the facts and circumstances

that the Court must consider in determining whether petitioner

has established that this factor is present are the same facts

and circumstances that the Court must consider in determining

that petitioner did not satisfy section 6015(b)(1)(C).      Indeed,

in holding that a requesting spouse did not qualify for equitable

relief, the Court has previously relied on, inter alia, its
                                - 25 -

findings that the requesting spouse did not satisfy section

6015(b)(1)(C).    See, e.g., Butler v. Commissioner, 114 T.C. at

284-286, 292.

     For the reasons discussed above in our analysis of section

6015(b)(1)(C), we conclude that petitioner had “reason to know”

of each of the understatements and shelter deductions at hand

within the meaning of this factor when she signed the subject

returns.    We hold that this factor does not weigh in favor of

granting equitable relief to petitioner for any of the subject

years.    Because Rev. Proc. 2000-15, supra, states that this

factor will only serve to weigh in favor of granting relief when

it is met, and fails to state that this factor will weigh against

granting relief when it is not met, we consider this factor

neutral

            v.   Nonrequesting Spouse’s Legal Obligation

     Petitioner does not claim that this factor favors her

position.    Nor do we find that such is the case.   The record does

not establish that Albin had a legal obligation pursuant to a

divorce decree or agreement to pay the outstanding liabilities.

Given the additional fact that the Albins were married to each

other at all relevant times, we hold that this factor does not

weigh in favor of granting equitable relief to petitioner for any

of the subject years.    Because Rev. Proc. 2000-15, supra, states

that this factor will only serve to weigh in favor of granting
                                 - 26 -

relief when it is met, and fails to state that this factor will

weigh against granting relief when it is not met, we consider

this factor neutral.

           vi.    Attributable to Nonrequesting Spouse

     The liabilities for which relief is sought are attributable

solely to the nonrequesting spouse, Albin, and respondent

concedes as much.     We hold that this factor weighs in favor of

granting equitable relief to petitioner for each of the subject

years.

     b.    Negative Factors

            i.    Attributable to the Requesting Spouse

     As stated above, none of the understatements is attributable

to petitioner.     We hold that this factor does not weigh against

granting equitable relief to petitioner for any of the subject

years.    Because Rev. Proc. 2000-15, supra, states that this

factor will only serve to weigh against granting relief when it

is met, and fails to state that this factor will weigh in favor

of granting relief when it is not met, we consider this factor

neutral.

            ii.    Knowledge or Reason To Know

     For the reasons stated above in our analysis of the positive

counterpart to this factor, we conclude that petitioner had

reason to know about the understatements and shelter deductions

in issue at all relevant times.     We hold that this factor weighs
                                - 27 -

against granting equitable relief to petitioner for all of the

subject years.    As stated in Rev. Proc. 2000-15, sec. 4.03(2)(b),

the presence of this factor is an “extremely strong factor

weighing against relief”, and a taxpayer such as petitioner may

offset this factor and qualify for equitable relief only in “very

limited situations” where “the factors in favor of equitable

relief are unusually strong”.

          iii.    Significant Benefit

     Petitioner argues that she did not significantly benefit

beyond normal support from the shelter losses giving rise to the

deficiencies.    According to petitioner, the only substantial

asset that the Albins purchased during the subject years was the

home that they purchased in Dana Point.   We reject petitioner’s

argument.13

     The claimed shelter losses giving rise to the deficiencies

provided both of the Albins with significantly more disposable

income than they otherwise would have had.    In order to determine

whether petitioner significantly benefited from those claimed

shelter losses, we consider whether the Albins were able to make

expenditures in each of the subject years that they otherwise



     13
       We note at the start that petitioner fails to mention
that in addition to the Albins’ home in Dana Point, they also
purchased during the subject years one of their three rental
properties and did so with a $20,000 cash downpayment. We also
note that the Albins purchased their second home in 1987 with a
cash downpayment of $200,000.
                                - 28 -

would not have been able to make.    See Alt v. Commissioner,

119 T.C. at 314; Jonson v. Commissioner, 118 T.C. at 119-120.

Normal support, which is measured by the circumstances of the

requesting spouse, is not a significant benefit.    Flynn v.

Commissioner, 93 T.C. 355, 367 (1989).

     On the record before us, we find that petitioner has failed

to establish the amount that the Albins expended annually for

their normal support before, during, and after the subject years.

On that record, we further find that petitioner has failed to

carry her burden of persuading us that she did not significantly

benefit beyond normal support from the shelter loss giving rise

to the deficiency for each subject year.    On the record before

us, we find that petitioner has failed to carry her burden of

establishing that this factor is not present in this case.      We

hold that this factor is neutral for each of the subject years.

                 iv.   Lack of Economic Hardship

     For the reasons stated above in our analysis of the positive

counterpart to this factor, we conclude that petitioner will not

suffer economic hardship from a denial of equitable relief in

each of the subject years.    We hold that this factor weighs

against granting equitable relief to petitioner for all of the

subject years.
                                - 29 -

          v.     Noncompliance With Federal Income Tax Laws

     Cipriotti concluded that petitioner was in compliance with

tax laws for all of the taxable years after the subject years.

Because Rev. Proc. 2000-15, supra, states that this factor will

only serve to weigh against granting relief when it is met, and

fails to state that this factor will weigh in favor of granting

relief when it is not met, we consider this factor neutral.

           vi.    Requesting Spouse’s Legal Obligation

     With respect to the positive counterpart of this factor, we

held that that factor does not weigh in favor of granting

equitable relief to petitioner for any of the subject years and

that it is neutral.    On the record before us, we also find that

this factor is neutral in that petitioner does not have a legal

obligation pursuant to a divorce decree or agreement to pay the

liabilities in issue and has been married to Albin at all

relevant times.

     c.   Other Relevant Factors

     On the record before us, we find that petitioner has failed

to carry her burden of establishing with respect to the subject

years any other factor that is not set forth in Rev. Proc.

2000-15, supra, and that would weigh in favor of granting her

equitable relief.
                                - 30 -

4.   Conclusion

      Upon examination of the entire record before us, we find

that petitioner has failed to carry her burden of establishing

that respondent abused his discretion in denying her equitable

relief for all of the subject years.      The only positive factor

that supports granting petitioner equitable relief is that the

liabilities in issue are attributable solely to Albin.      Two

negative factors, i.e., reason to know and lack of economic

hardship, weigh against granting her equitable relief.      As noted

above, the reason-to-know factor is “an extremely strong factor

weighing against relief” which generally may be outweighed only

“when the factors in favor of equitable relief are unusually

strong”.   Rev. Proc. 2000-15, sec. 4.03(2)(b).      The fact that the

subject liabilities are attributable solely to Albin is not such

an “unusually strong” factor.    Id.     Such is especially so given

that we do not find that petitioner will suffer an economic

hardship in paying those liabilities.      We conclude and hold that

respondent did not abuse his discretion when he denied equitable

relief to petitioner as to the liabilities in issue.

      All of petitioner’s arguments have been considered, and we

have rejected those arguments not discussed herein as without

merit.


                                             Decision will be entered

                                       for respondent.
