                  T.C. Summary Opinion 2008-49



                      UNITED STATES TAX COURT



                 ANDREA C. CASULA, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 3385-05S.                Filed May 5, 2008.



     Paul Kalinich (specially recognized), for petitioner.

     Mayer Silber, for respondent.



     GOLDBERG, 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.   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.   Unless otherwise indicated, subsequent

section references are to the Internal Revenue Code in effect for
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the years in issue, and all Rule references are to the Tax Court

Rules of Practice and Procedure.

     This cases arises from petitioner’s request for relief from

joint income tax liability for the taxable year 2000.   A notice

of deficiency was not issued.   Petitioner filed Form 8857,

Request for Innocent Spouse Relief (And Separation of Liability

and Equitable Relief), seeking relief under section 6015(f).

Respondent denied petitioner’s request, and the sole issue for

decision is whether respondent abused his discretion.

                             Background

     The stipulation of facts and the attached exhibits are

incorporated herein by reference.   At the time the petition was

filed, petitioner resided in Illinois.

     Petitioner married Christopher Casula (Mr. Casula) on April

23, 1963.   On the day of the trial--April 23, 2007--petitioner

and Mr. Casula (the Casulas) were celebrating their 44th wedding

anniversary.

     From 1963 through 1983, Mr. Casula worked for Montgomery

Ward.   During this time, he received his M.B.A. from the Kellogg

School of Management at Northwestern University.   Petitioner was

not employed outside of the home between 1963 and 1983.

     Mr. Casula ended his employment with Montgomery Ward in 1983

and began working as vice president for a Montgomery Ward

subsidiary that same year.   Mr. Casula was employed in this
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capacity until approximately 1987, when he decided to start his

own Internet-based customer service company.

     At or around the time that Mr. Casula left Montgomery Ward

petitioner entered the workforce, first with Northern Trust Bank

and then with the firm of Marsh & McLennan.    Petitioner has

worked for Marsh & McLennan for the past 20 years. The Casulas’

tax return for 2000 lists petitioner’s job title as “executive”.

     In 2000 Mr. Casula began experiencing business setbacks that

prevented him from taking any salary whatsoever.    In order to

help provide capital for his operation, Mr. Casula sought

assistance from two personal funding sources; namely, employee

stock held by petitioner in Marsh & McLennan and Mr. Casula’s

section 401(k) account.

     At Mr. Casula’s request, petitioner sold a portion of her

Marsh & McLennan stock in 2000 for $16,375.    During the same

year, Mr. Casula took an early distribution of $53,680 from his

section 401(k) account.   Mr. Casula used the proceeds of these

transactions for his business.

     Mr. Casula’s business continued to experience financial

difficulties throughout 2001.    His difficulties were compounded

by a series of medical problems that affected him and both of his

parents.   Mr. Casula eventually decided to cease business

operations in December 2001.    From 2001 through 2006 Mr. Casula
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was unemployed and seeking work.    He presently works for a

Washington, D.C.-based nonprofit organization.

     The Casulas had an accountant prepare their 2000 Federal

income tax return.    They filed a joint 2000 Form 1040, U.S.

Individual Income Tax Return on April 13, 2002.    The Casulas

reported total income of $120,978 from the following sources:

(1) $50,304 of wages, salaries, tips, etc.; (2) $454 of ordinary

dividends; (3) a $162 State tax refund; (4) $16,375 of capital

gain; (5) a $51,659 IRA distribution; and (6) $2,023 of pensions

and annuities.   From their $120,977 of adjusted gross income the

Casulas subtracted $19,168 of itemized deductions and $5,600 of

exemption deductions to arrive at $96,209 of taxable income,

which resulted in a $19,981 tax.    After adding a $4,413 10-

percent additional tax for an early IRA distribution, the total

tax reported due was $24,394.    After they applied $4,954 in total

payments, their return reported $19,440 tax due, but they

remitted zero.   Respondent accepted the return and assessed

additions to tax for late filing and failure to pay and interest

on the balance due.    As of March 27, 2007, the total unpaid

liability for taxable year 2000 is $19,986.65.    Petitioner

submitted her Form 8857 on August 6, 2003, and respondent denied

her request for relief on November 17, 2004.
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                             Discussion

     Except as otherwise provided under section 6015, petitioner

bears the burden of proof with respect to her entitlement to

relief under section 6015.   See Rule 142(a); Alt v. Commissioner,

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

2004).

     Section 6013(d)(3) provides that if a joint return is filed,

the tax is computed on the taxpayer’s aggregate income, and

liability for the resulting tax is joint and several.    See also

sec. 1.6013-4(b), Income Tax Regs.     Relief may be granted under

section 6015 under limited circumstances.

     Generally, in order to obtain relief from joint and several

liability a spouse must qualify under section 6015(b) or, if

eligible, allocate liability under section 6015(c).    The parties

agree that petitioner is not entitled to seek relief under

section 6015(b) or (c).   If relief is not available under section

6015(b) or (c), a spouse may seek equitable relief under section

6015(f).   Fernandez v. Commissioner, 114 T.C. 324, 329-331

(2000); Butler v. Commissioner, 114 T.C. 276, 287-292 (2000).

     The Internal Revenue Service (IRS) may relieve an individual

from joint and several liability under section 6015(f) if, taking

into account all the facts and circumstances, it is inequitable

to hold the taxpayer liable for any unpaid tax or deficiency and
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she or he does not qualify for relief under section 6015(b) or

(c).

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

prescribed guidelines in Rev. Proc. 2003-61, 2003-2 C.B. 296,

modifying Rev. Proc. 2000-15, 2000-1 C.B. 447, that are to be

used in determining whether it is inequitable to hold a

requesting spouse liable for all or part of the deficiency.1

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

following seven threshold conditions that must be satisfied

before a request for relief will be considered:    (1) The

requesting spouse filed a joint return for the year for which

relief is sought; (2) relief is not available under section

6015(b) or (c); (3) the application for relief is made no later

than 2 years after the date of the Commissioner’s first

collection activity; (4) no assets were transferred between

spouses as part of a fraudulent scheme; (5) the nonrequesting

spouse did not transfer disqualifying assets to the requesting

spouse; (6) the requesting spouse did not file or fail to file

the return with fraudulent intent; and (7) absent enumerated


       1
      Rev. Proc. 2000-15, 2000-1 C.B. 447, was superseded by Rev.
Proc. 2003-61, 2003-2 C.B. 296, which is effective as to requests
for relief filed on or after Nov. 1, 2003, and for requests for
relief pending on Nov. 1, 2003, as to which no preliminary
determination letter had been issued as of that date. Although
petitioner’s application for relief was filed on Sept. 12, 2003,
it was still pending on Nov. 1, 2003. The preliminary
determination letter was issued on Nov. 17, 2004.
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exceptions, the liability from which relief is sought is

attributable to an item of the nonrequesting spouse.   Respondent

argues that because part of the unpaid liability stems from

petitioner’s sale of her Marsh & McLennan stock, this last

threshold requirement has not been met.   We agree.   Where as here

the requesting spouse might fail to qualify for relief under Rev.

Proc. 2003-61, sec. 4.01, the Court, for the sake of

completeness, will nevertheless examine whether we may grant

relief under Rev. Proc. 2003-61, sec. 4.03, 2003-2 C.B. at 298.

     Rev. Proc. 2003-61, sec. 4.03(2), 2003-2 C.B. at 298, lists

the eight nonexclusive factors that the Commissioner will

consider in determining whether, taking into account all the

facts and circumstances, it is inequitable to hold the requesting

spouse liable for all or part of the deficiency, and full or

partial equitable relief under section 6015(f) should be granted.

These nonexclusive factors include whether:   (1) The requesting

spouse is separated or divorced from the nonrequesting spouse;

(2) the requesting spouse will suffer economic hardship without

relief; (3) the requesting spouse did not know or have reason to

know of the item giving rise to the deficiency; (4) the

nonrequesting spouse had a legal obligation to pay the

outstanding liability; (5) the requesting spouse received a

significant benefit from the item giving rise to the deficiency;

(6) the requesting spouse has made a good faith effort to comply
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with income tax laws in subsequent years; (7) the requesting

spouse was abused by the nonrequesting spouse; and (8) the

requesting spouse was in poor mental or physical health when

signing the return or requesting relief.     Rev. Proc. 2003-61,

supra, further provides that no single factor will be

determinative, but that all relevant factors will be considered.

We will now consider petitioner’s request in the light of these

relief factors.

     The Casulas are still married, and therefore petitioner

fails to meet the first factor.

     With respect to the second factor, petitioner must show that

she would be unable to pay basic reasonable living expenses if

relief were not granted.   See Monsour v. Commissioner, T.C. Memo.

2004-190.   Being unable to pay basic reasonable living expenses

would amount to economic hardship.     Sec. 301.6343-1(b)(4)(i),

Proced. & Admin. Regs.   Petitioner was silent as to how

respondent’s denial of her request for relief would result in

economic hardship.   She is gainfully employed as an executive

with Marsh & McLennan.   The Court fails to see, and petitioner

has neither raised as an issue nor established, that she would

suffer economic hardship if her request for relief from joint

liability were denied.

     As to the third factor, as discussed earlier petitioner sold

her Marsh & McLennan stock in 2000.     Petitioner sold the stock at
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the request of her husband, and therefore she had knowledge of

the sale as well as the distribution taken from her husband’s

section 401(k) account.   She also testified that she had actual

knowledge of all of the items reported on the Casulas’ 2000 tax

return.   Rev. Proc. 2003-61, sec. 4.03, specifically states that

actual knowledge by the requesting spouse of the item giving rise

to the deficiency is a strong factor weighing against relief.

This strong factor may be overcome only if the factors in favor

of equitable relief are particularly compelling.    We conclude

that they are not.

     As the Casulas are still married, the fourth factor is

inapplicable.

     As to the fifth factor, we have insufficient evidence to

determine whether petitioner received a substantial benefit when

her husband purportedly used the proceeds of the sale of her

Marsh & McLennan stock or his IRA distribution to help keep his

business afloat.   We are convinced that petitioner did not have

access to Mr. Casula’s business funds, although she did have

access to the couple’s personal checking account and there is

evidence that both of these funds--the proceeds from the stock

sale and the IRA distribution--were distributed to Mr. Casula’s

business through the couple’s personal account.    We also

recognize that by using these funds to keep his business afloat

Mr. Casula prevented the couple from losing their home or other
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personal assets.   The Court is therefore convinced that the

substantial benefit factor weighs against granting relief.

     The sixth factor concerns compliance with income tax laws

and, particularly, the good faith efforts of the requesting

spouse in subsequent years.   Rev. Proc. 2003-61, sec.

4.03(2)(a)(vi), 2003-2 C.B. at 299.    With respect to this

inquiry, there is no evidence outside of the year at issue.

Accordingly, we find this factor neutral.

     As to the seventh factor, abuse, petitioner has offered no

evidence that she suffered any abuse at the hands of her husband.

Likewise, and as to the final factor, whether the requesting

spouse seeking relief was in poor mental or physical health when

signing the return, there is nothing in the record to show that

petitioner suffered from any ailment that would have affected her

ability to pay her Federal income tax obligation for the year in

issue.   As these last two factors weigh only in favor of, and not

against, relief, they are neutral.     Id. sec. 4.03(2)(b)(ii),

2003-2 C.B. at 299.

     Accordingly, since none of the relevant factors identified

in the pertinent revenue procedure weigh in favor of granting

relief, the Court holds that there was no abuse of discretion by

respondent in denying relief to petitioner under section 6015(f).


                                           Decision will be entered

                                       for respondent.
