                  T.C. Summary Opinion 2005-32



                     UNITED STATES TAX COURT



                  LINDA J. BOWEN, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 1447-04S.             Filed March 28, 2005.


     Linda J. Bowen, pro se.

     Audrey M. Morris, for respondent.



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

the provisions of section 7463 of the Internal Revenue Code in

effect at the time the petition was filed.   Unless otherwise

indicated, all subsequent section references are to the Internal

Revenue Code in effect for the year in issue, and all Rule

references are to the Tax Court Rules of Practice and Procedure.

The decision to be entered is not reviewable by any other court,

and this opinion should not be cited as authority.
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     The case arises from petitioner’s election to seek relief

from joint and several liability for Federal income tax for

petitioner’s 1999 taxable year under section 6015.   Respondent

determined that petitioner is not entitled to relief under

section 6015(b), (c), or (f).

     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

     Most of the facts are stipulated.    The stipulated 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 Cleburne, Texas.

     During 1999 petitioner was married to Mr. Jerry Jorgensen

(Jorgensen).    Petitioner has a college degree and was employed as

the manager of a medical office.   Jorgensen is a high school

graduate and was employed by G.K. Carlile, Inc. as a

“serviceman”.   Jorgensen started his own business in 1993; the

business failed; and in 1999 only an open bank account remained.

     Petitioner and Jorgensen maintained a joint checking account

into which they deposited all their wage income.   Petitioner not

only wrote most of the checks drawn on the account, but she also

reviewed the bank statements and balanced the checkbook.
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Petitioner prepared the joint Federal income tax return for 1999

for Jorgensen and herself.   After the return was signed but prior

to its filing, Jorgensen informed petitioner that the return was

“missing something”.   In a letter to respondent dated May 21,

2002, petitioner stated that her husband advised her that an

employer-supplied document was missing from the return; no copy

was available, “so the return was mailed as it was.”    As she

discovered later, missing from the return was income paid to

Jorgensen that was reported on “Form 1099”.   Petitioners did not

file an amended return to report the omitted income.

     Petitioner and Jorgensen were divorced on February 13, 2001.

Under the “Agreed Final Decree of Divorce”, Jorgensen is required

to pay child support and any indebtedness due the Internal

Revenue Service for their Federal income taxes for tax years

during their marriage ending with calendar year 2000.    Neither of

these obligations has been satisfied.

     On August 15, 2001, respondent sent to petitioner and

Jorgensen a statutory notice of deficiency for 1999.    The notice

determined that the joint return filed by petitioner and

Jorgensen failed to report nonemployee compensation of $16,638

which (after a deduction for self-employment tax) resulted in an

income tax deficiency of $5,206.   No petition for redetermination

of the deficiency was filed with the Court by petitioner or

Jorgensen.
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     Petitioner filed a Form 8857, Request for Innocent Spouse

Relief (And Separation of Liability and Equitable Relief), on

March 11, 2003, and later she submitted a Form 886-A,

Questionnaire for Requesting Spouse.

                             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 under section 6015(c) of the

item giving rise to the deficiency.

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

apply, section 6015(e) gives jurisdiction to the Court “to

determine the appropriate relief available to the individual

under this section”.   In addition, if relief is not available

under section 6015(b) or (c), an individual may seek equitable

relief under section 6015(f).   The Court has jurisdiction to

review for abuse of discretion the Commissioner’s determination

under section 6015(f).   Fernandez v. Commissioner, 114 T.C. 324,

329-331 (2000); Butler v. Commissioner, 114 T.C. 276, 287-292
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(2000).   The Court’s review is not limited to the Commissioner’s

administrative record.   Ewing v. Commissioner, 122 T.C. 32, 44

(2004).

     Except as otherwise provided in section 6015, the taxpayer

bears the burden of proof.   Rule 142(a); Alt v. Commissioner, 119

T.C. 306, 311 (2002), affd. 101 Fed. Appx. 34 (6th Cir. 2004).

Respondent has failed to carry his burden of proof with respect

to a factual issue necessary to deny petitioner relief under

section 6015(c).   The Court, therefore, grants petitioner relief

under section 6015(c), and we need not address her claims for

relief under section 6015(b) and (f).

Section 6015(c) Relief

     The Court has described section 6015(c) as functioning to:

“[relieve] the requesting spouse of liability for the items

making up the deficiency that would have been allocable solely to

the nonrequesting spouse if the spouses had filed separate tax

returns for the taxable year.”     Mora v. Commissioner, 117 T.C.

279, 290 (2001).   In order to obtain relief under section

6015(c), the party seeking relief (the requesting spouse) must

satisfy certain requirements.    The return for which relief is

sought must be a joint return, section 6015(c)(1); the requesting

spouse must timely file an election for relief, section

6015(c)(3)(B); and, at the time the election is filed, the

requesting spouse must no longer be married to, or must be
                               - 6 -

legally separated or living apart from, the individual with whom

the requesting spouse filed the joint return (the nonrequesting

spouse), section 6015(c)(3)(A)(i)(I).   Petitioner satisfies those

requirements.   Relief is available to the requesting spouse only

for that portion of the deficiency properly allocable to the

nonrequesting spouse.   Sec. 6015(c)(1), (d).   Respondent concedes

that the deficiency is entirely allocable to Jorgensen.

     A requesting spouse meeting the above requirements may still

be denied relief under section 6015(c) if the Commissioner can

demonstrate1 that, at the time the requesting spouse signed the

joint return, she had actual knowledge of any item giving rise to

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

Sec. 6015(c)(3)(C).   “Actual knowledge” for purposes of section

6015(c)(3)(C) is the actual and clear awareness of the item, as

distinguished from mere reason to know of the item.      Cheshire v.

Commissioner, 282 F.3d 326, 337 n.26 (5th Cir. 2002), affg. 115

T.C. 183, 195 (2000); sec. 1.6015-3(c)(2)(iii), Income Tax Regs.2

The mere fact that information is available to a taxpayer

concerning the source of income is insufficient to show actual

knowledge of the item of omitted income.   Charlton v.

     1
      Respondent has both the burden of producing evidence and
the risk of nonpersuasion on the issue of actual knowledge. Sec.
1.6015-3(c)(2)(ii), Income Tax Regs.
     2
      The regulation is applicable for elections or requests for
relief filed on or after July 18, 2002. Sec. 1.6015-9, Income
Tax Regs.
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Commissioner, 114 T.C. 333, 341 (2000); Rowe v. Commissioner,

T.C. Memo. 2001-325; Martin v. Commissioner, T.C. Memo. 2000-346.

     Respondent did not call Jorgensen to testify.      Respondent

failed to prove that, at the time petitioner signed the 1999

joint return, she had actual knowledge of the omission of the

nonemployee income from the return.

Conclusion

     Petitioner is eligible for relief under section 6015(c), and

respondent has failed to nullify her election by demonstrating

that she had actual knowledge of the item giving rise to the

deficiency at the time she signed the joint return.

     Respondent erred in denying petitioner relief under section

6015(c).    Petitioner has no liability for the deficiency.

     Reviewed and adopted as the report of the Small Tax Case

Division.


                                             Decision will be

                                        entered for petitioner.
