                        T.C. Memo. 2004-183



                      UNITED STATES TAX COURT



NANCY M. O’NEILL, Petitioner, AND ROBERT B. WOLLOW, Intervenor v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 17375-02.             Filed August 11, 2004.



     Nancy M. O’Neill, pro se.

     Robert B. Wollow, pro se.

     Thomas M. Rohall, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     MARVEL, Judge:   Pursuant to section 6015(e) and Rule 321,1

petitioner seeks review of respondent’s determination that she is


     1
      All section references are to the Internal Revenue Code in
effect at all relevant times, and all Rule references are to the
Tax Court Rules of Practice and Procedure. Monetary amounts are
rounded to the nearest dollar.
                               - 2 -

not entitled to relief from joint and several liability on her

1998 joint return.   The issue for decision is whether

respondent’s denial of relief under section 6015(f) was an abuse

of discretion.   On January 13, 2003, Robert B. Wollow (Mr.

Wollow), petitioner’s former spouse, filed a notice of

intervention with the Court, challenging petitioner’s entitlement

to relief from joint and several liability.    See Rule 325.

                         FINDINGS OF FACT

     Some of the facts have been stipulated.    We incorporate the

stipulated facts into our findings by this reference.    Petitioner

resided in Santa Rosa, California, when she filed her petition in

this case.

Background

     Petitioner and Mr. Wollow became legally separated in

December 1997 and divorced in February 1999.    Petitioner has a

bachelor’s degree in business administration.    During 1998, after

her employment as the director of human resources for a mortgage

banking company was terminated, petitioner was employed at a

lumber company for approximately 1 month.   Thereafter, in 1998,

petitioner worked as a human resources manager for a software

company.   Meanwhile, Mr. Wollow was employed as an airline pilot.

Petitioner’s Bankruptcy and the 1998 Joint Income Tax Return

     On April 7, 1999, petitioner filed a chapter 7 bankruptcy

petition with the United States Bankruptcy Court for the Northern
                                 - 3 -

District of California (the bankruptcy court).    At the time of

petitioner’s bankruptcy proceeding, Mr. Wollow was involved in

his own bankruptcy proceeding.    On July 7, 1999, the bankruptcy

court granted petitioner a discharge.

     In April 1999, Mr. Wollow informed petitioner that,

according to his preliminary calculations, they owed income taxes

for 1998 (the 1998 joint liability).     Petitioner offered to pay

the 1998 joint liability out of her severance pay from the

mortgage banking company.   At the suggestion of Mr. Wollow,

however, petitioner ultimately agreed that her individual

retirement account (IRA) would be seized by the bankruptcy court

and used to pay the 1998 joint liability.

     On August 15, 1999, petitioner and Mr. Wollow timely filed a

joint Federal income tax return for 1998 (the joint return).    On

the joint return, petitioner and Mr. Wollow reported wages in the

amounts of approximately $140,000 and $145,000, respectively, and

Federal income tax withholding in the amounts of $21,615 and

$26,547, respectively.   The joint return showed income tax due in

the amount of $5,294.2   Instead of submitting a payment with the

joint return, petitioner and Mr. Wollow attached a letter in

which they advised respondent of their respective bankruptcy



     2
      The amount of tax shown as due on the joint return was also
attributable to IRA distributions that petitioner and Mr. Wollow
received in the amounts of $2,708 and $1,877, respectively.
                                - 4 -

proceedings and informed respondent that the bankruptcy trustee

would retain “certain IRA monies” to pay the 1998 joint

liability.

Payment of the 1998 Joint Liability

     On petitioner’s separately filed 1999 Federal income tax

return, petitioner reported total wages in the amount of $80,100

and alimony in the amount of $29,700.    The return showed a refund

due in the amount of $5,021.    On September 4, 2000, respondent

applied petitioner’s 1999 refund to offset the 1998 joint

liability.    At this time, petitioner’s IRA remained exempted from

the bankruptcy estate.    Petitioner did not submit signed

instructions for liquidating the IRA and allocating the proceeds

until January 2001, several months after respondent applied

petitioner’s 1999 refund to the 1998 joint liability.

Petitioner’s Innocent Spouse Claim

     On July 2, 2002, petitioner timely filed with respondent

Form 8857, Request for Innocent Spouse Relief.    In her Form 8857,

petitioner asserted that “Since the 1998 income tax liability is

a community liability, it is inequitable to apply [the]

taxpayer’s separate property to its payment.    Community assets

which are still available in the bankruptcy estate should instead

be used.”    In a final notice dated August 14, 2002, respondent
                               - 5 -

denied petitioner’s request for innocent spouse relief.     On

November 6, 2002, petitioner filed a petition with this Court

contesting respondent’s determination.

                              OPINION

     In general, spouses who file joint Federal income tax

returns are jointly and severally liable for the full amount of

the tax liability.   Sec. 6013(d)(3); Butler v. Commissioner, 114

T.C. 276, 282 (2000).   Pursuant to section 6015, however, a

spouse may seek relief from joint and several liability.3

     One form of relief from joint and several liability on a

joint return is equitable relief under section 6015(f).     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.

The Commissioner uses guidelines prescribed in Rev. Proc. 2000-

15, 2000-1 C.B. 447, to determine whether a taxpayer qualifies


     3
      Sec. 6015 applies to tax liabilities arising after July 22,
1998, and to tax liabilities arising on or before July 22, 1998,
but remaining unpaid as of such date. Internal Revenue Service
Restructuring and Reform Act of 1998, Pub. L. 105-206, sec.
3201(g), 112 Stat. 740.
                               - 6 -

for relief from joint and several liability under section

6015(f).4   We review the Commissioner’s denial of relief under

section 6015(f) for abuse of discretion.   See Washington v.

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

supra at 292.

      Before the Commissioner will consider a taxpayer’s request

for relief under section 6015(f), the taxpayer must satisfy seven

threshold conditions listed in Rev. Proc. 2000-15, sec. 4.01,

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

satisfies these conditions.

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

that equitable relief may be granted under section 6015(f) if,

taking into account all facts and circumstances, it is

inequitable to hold the requesting spouse liable.   In considering

a request for relief, certain factors weigh in favor of granting

relief, whereas other factors weigh against granting relief.      See

id.   No single factor is determinative in any particular case,

and all factors are to be considered and weighed appropriately.

See Washington v. Commissioner, supra at 148; Jonson v.

Commissioner, 118 T.C. 106, 125 (2002), affd. 353 F.3d 1181 (10th


      4
      On Aug. 11, 2003, the Commissioner issued Rev. Proc. 2003-
61, 2003-32 I.R.B. 296, which supersedes Rev. Proc. 2000-15,
2000-1 C.B. 447, effective for requests for relief filed on or
after Nov. 1, 2003, and for requests for relief pending on Nov.
1, 2003, for which no preliminary determination letter has been
issued as of that date.
                               - 7 -

Cir. 2003).   Moreover, the list of factors is not intended to be

exhaustive.   See Washington v. Commissioner, supra at 148.

     The following six factors weigh in favor of granting relief

for the liability:   (1) The requesting spouse is separated or

divorced from the nonrequesting spouse; (2) the requesting spouse

would suffer economic hardship if relief is denied; (3) the

nonrequesting spouse abused the requesting spouse; (4) the

requesting spouse did not know or have reason to know that the

liability would not be paid; (5) the nonrequesting spouse has a

legal obligation pursuant to a divorce decree or agreement to pay

the liability; and (6) the liability is solely attributable to

the nonrequesting spouse.   See Rev. Proc. 2000-15, sec. 4.03(1),

2000-1 C.B. at 448-449.   On the other hand, the following six

factors weigh against granting relief for the liability:    (1) The

unpaid liability is attributable to the requesting spouse; (2)

the requesting spouse knew or had reason to know when she signed

the return that the reported liability would be unpaid; (3) the

requesting spouse significantly benefited (beyond the normal

support) from the unpaid liability; (4) the requesting spouse

will not experience economic hardship if relief is denied; (5)

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 to which the request for relief relates; and (6) the

requesting spouse had a legal obligation pursuant to a divorce
                               - 8 -

decree or agreement to pay the liability.   See Rev. Proc. 2000-

15, sec. 4.03(2), 2000-1 C.B. at 449.   Our analysis of the

factors and the parties’ arguments follows.

Marital Status

     Respondent concedes that this factor weighs in favor of

granting relief.

Economic Hardship

     At trial, petitioner alleged that, in the past, she had

experienced economic hardship attributable to the 1998 joint

liability,5 but petitioner offered no financial information in

support of her allegation.   Petitioner has not alleged that she

is currently experiencing, or would experience, economic hardship

if she is not relieved of the 1998 joint liability.   In the

absence of any evidence of economic hardship, we must conclude

that this factor weighs against granting relief.

Abuse

     Petitioner has not alleged that Mr. Wollow abused her.

Consequently, this factor is neutral.




     5
      According to petitioner, during 2000, when respondent
applied petitioner’s 1999 refund to offset the 1998 joint
liability, petitioner was a single parent with one daughter in
her custody during 70 percent of the year and another daughter in
college. Petitioner testified that, after paying the bills, “not
too much [was] left over.”
                                 - 9 -

No Knowledge or Reason To Know

     Petitioner knew that the tax liability shown on the 1998

joint return would not be paid when the return was filed.

Petitioner contends that, when she signed the joint return, she

thought that her IRA would be seized by the bankruptcy court and

used to pay the 1998 joint liability.    According to petitioner,

the reason that she and Mr. Wollow requested an extension for

filing the joint return was to give the bankruptcy court more

time to seize and distribute her IRA.

     We do not see how petitioner reasonably could have expected

that her IRA would be used to satisfy the 1998 joint liability

when she had not authorized the IRA’s liquidation and

distribution.   Moreover, because petitioner agreed to pay the

1998 joint liability with the proceeds from her IRA, petitioner

knew that Mr. Wollow would not pay it.   This factor strongly

weighs against granting relief.    See Washington v. Commissioner,

supra at 150.

The Spouses’ Legal Obligations

     At trial, petitioner testified that, pursuant to the divorce

decree, both she and Mr. Wollow were “responsible for the joint

filed return and any community debts to be paid.”   Petitioner

agrees, therefore, that under the decree she and Mr. Wollow share

the legal obligation for paying the 1998 joint liability.

Accordingly, this factor is neutral.
                                - 10 -

Significant Benefit

      The record does not indicate that petitioner benefited

beyond normal support from not paying the 1998 joint liability.

As articulated in Ewing v. Commissioner, 122 T.C. 32, 45 (2004),

this factor weighs in favor of granting relief.

Source of the Liability and Noncompliance With Federal Income Tax
Laws

      These two factors are neutral.     First, the record reflects

that the 1998 joint liability was attributable to both petitioner

and Mr. Wollow.   Second, there is no evidence that petitioner has

not made a good-faith effort to comply with the Federal income

tax laws since 1998.

Conclusion

      Petitioner’s main contention in this proceeding has been

that, because the 1998 joint liability was ultimately paid from

her separate property rather than from her and Mr. Wollow’s

community property, she is entitled to equitable relief.

Although we understand petitioner’s frustration with the apparent

lack of fairness, such circumstances alone are not grounds for

relief under section 6015(f).    Petitioner knew when the 1998

joint return was filed that she had an obligation to pay the 1998

joint liability and that some of her assets would be used to pay

it.   The fact that respondent applied her 1999 tax refund to the

1998 tax liability instead of waiting for the bankruptcy court to
                             - 11 -

satisfy the liability with her IRA is not sufficient to qualify

petitioner for relief under section 6015(f).

     After considering all of the facts and circumstances, we

conclude that respondent’s decision to deny relief from joint and

several liability was not an abuse of discretion.

     To reflect the foregoing,


                                        Decision will be entered

                                   for respondent.
