T.C. M em o . 2 0 1 8 -1 1 5

UNITED STATES TAX COURT

RICK E. J ACOBSEN, Pet it i o n er v . COM M ISSIONER OF INTERNAL REVENUE, Res po n d en t

Do ck etNo . 2 5 3 48 -1 5
. Fi l edJ u l y 2 5, 2 0 18
.
Ri ckE. J aco bs en , p ro s e. Ri ch ardC. Gro s en i ckan dM ark Kru eg er (s tu d en t ), fo r res p o nd en t .

M EM ORANDUM FINDINGS OF FACT AND OPINION PARIS, J u d g e: Pu rs uan tt o s ect i o n 6 0 1 5 (e)(1 ), 1 p et i ti o n er s eek s rev i ew o f
res p o n d en t’ s d et erm i n at i o n thath e i s n o ten t i t l edt o rel i ef fro m jo i ntan ds ev eral l i ab i l i ty un d er s ect i on 6 01 5 (b ), (c), an d(f) fo r 2 0 10 an d2 0 11 wi th res p ectt o

1 Un l es s o th erwi s e i nd i cat ed , al l s ect i o n referen ces are t o th e In t ern al Rev enu e Co de i n effect atal l rel ev an tt i m es .- 2
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[* 2 ] Fed eral i n co m e t ax return s t h ath e jo i n t l y fi l ed wi th h i s fo rm er s po u s e, Ti n a Lem m en s . 2 Pet i t i o n er s eek s rel i ef fro m th o s e p o rt i o ns o f t h e 2 0 1 0 an d2 0 1 1 t ax l i ab i l i t i es ari s i n g fro m

i nco m e M s . Lem

m en s em b ezzl edfro m

h er em p lo y er. 3 FINDINGS OF FACT So m e o f t h e fact s h av e b een s ti p u lat ed an dare s o fo u n d. Th e s t ip u l at ed fact s an dex h i b i t s are i nco rp o rat edh erei n b y th i s referen ce. Pet i t i o n er res i d edi n W i sco n s i n wh en h e t i m el y fi ledh i s p et it i o n . 4 Pet i t i o ner an d M s. Lem

m en s were m arri edatal l t i m es duri n g th e y ears i n i s su e. In 2 01 4 M s. Lem

m en s fi l edfo r d iv o rce, an d o n M ay 5 , 2 0 1 5, thei r d i v o rce b ecam e fi n al
.

2 Th e p et it i o n al s o s ou g h trel i ef fro m jo i n t an ds ev eral l i ab i l it y fo r 2 0 0 9
. Pet i t io n er’ s 2 0 0 9 Fed eral i n co m e t ax l i ab i l i ty , h o wev er, was d i s ch arg edi n h i s ch ap ter 7 b an krupt cy

cas e b efo re t h e Offi ce o f Ap p eal s fi n al d et erm i n at i o n was i s su edan dh e fi l edth e p et i t i o n i n th i s cas e. Res p o n d en tfi l eda m ot i o n t o d i s m i s s fo r l acko f ju ri s di ct i o n as t o t ax y ear 2 00 9 th atthe Co u rtg ran t edo n Feb ru ary 4 , 2 0 1 6
. 3 M s . Lem

m en s was arres t edfo r em b ezzl em en ti n J un e 2 0 1 1 . InJ an u ary 2 0 1 2 s h e was s en ten ced t o i n carcerat i o n an d o rd ered t o p ay res t i tu t io n o f o v er $ 5 0 0 ,0 0 0 . Inh is p et i t i o n , p et i ti o n er req u es tedi n n ocen ts p ou s e rel i ef fo r al l o f t h e l i ab i l i t i es fo r t h e y ears i n i s su e. Attri al h e co nced edthath e i s s eek i n g rel i ef o n l y fro m th e l i ab i l it i es an daccu racy -rel at edp en al t i es as s oci at edwi th th e em bezzl em en ti n co m e. 4 OnDecem

b er 1 8 , 2 0 1 5 , M s . Lem

m en s fi leda n o t i ce o f i n t erv en t i o n . On M arch 3 1 , 2 0 1 7 , s h e fi l eda m o t i o n t o wi th draw as i n t erv en o r, wh i ch th e Co u rt g ran t ed
.- 3
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[* 3 ] I. Back g ro u n d Pet i t i o ner h o l d s an as s o ci at e’ s d eg ree b u th as n o fo rm al edu cat i o n i n b u s i n es s , acco u nt i n g , o r fi n an ce. In2 0 1 0 an d2 0 1 1 p et it i on er was em p l o y edas a
m ach i n e o perat o r ata fact o ry , an do n h i s d ay s o ff h e i n s pect edp ro p ert ies fo r fi nan ci al i n s t i tut i o n s an d i n s u ran ce co m p an i es (h om e i n s p ect io n b us i n es s ). Pet i t io n er’ s 1 2 -h o u r s h i ft s 1 4 d ay s p er m o n th ath i s m an u fact u ri ng jo b l efth i m t i m e t o wo rko n the h o m e i n sp ect i o n b u si n es s . M s . Lem m en s , an acco u n t an t , was em p lo y edata l o cal b l o o db an k du ri n g th e y ears i n i s s u e u n ti l h er t erm i n at i o n i n earl y 2 0 11 . M s . Lem

m en s m an ag edth e fam i l y ’ s p ers o nal fi n an ces an dth o s e o f t h e h o m e i n s p ect io n b us i n es s . 5 Befo re M s . Lem m en s ’ arres t, p et i t i o n er n ev er p art i ci p at edi n m an ag i n g th e fam i l y fi n an ces ; h e n ev er rev i ewedb an ko r cred i tcards t at em en ts o r ex am in edth ei r p ers o n al o r b u s i n es s fi n an ces . Pet it i o n er rel i edo n M s . Lem m en s t o h an d l e th e fam i l y fi n an ces b ecau s e o f h er t rai n i n g as an acco u n t an t . Pet i t i o ner d ep os i t edh is wag es i n a p ers o nal ch eck i n g acco u n tatEv erg reen Cred i tUn i o n . In co m e fro m th e h o m e i n sp ect i o n b u s in es s an dM s . Lem m en s ’

5 Pet i t i on er p erfo rm edi n t eri o r i n sp ect i o n s , s ecu redv acan tp ro p ert ies , an d p erfo rm edm i n o r rep ai rs fo r wh i ch h e o ccas i o n al l y i n cu rredex p en s es . M s . Lem m en s p rep aredth e i nv o i ces fo r p et i t i o n er’ s wo rkan dth e rei m b u rs em en t req u es t s fo r h is ex p en s es .- 4
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[* 4 ] wag es were d ep o si t edi n a jo i n tacco u n t p et i ti o n er h ad acces s t o at Co m m u n i ty Fi rs tCred itUn i o n . Th e h o m e i n s p ect i o n b u s i n es s d i dn o th av e a
s ep arat e b an k acco u n t . Cl i en t s ’ ch eck s were ad dres s edd i rect l y t o M s . Lem

m en s , an d s he d ep o s i t edth em

i n t o th e jo i n t acco u n t. Pet i t i o n er p eri o di cal l y wi th drew fu n d s fro m

th e jo i n tacco u n tt o co v er h is ev ery d ay l i v in g ex p en s es . In J u n e 2 0 11 M s . Lem

m en s was arres t edfo r em b ezzl i n g fu nd s fro m

h er
em pl o y er. M s . Lem

m en s em b ezzl edan es ti m at ed$ 4 8 5 ,6 8 1 fro m h er em p l o y er
o v er s ev eral y ears , i n cl u di n g th e y ears i n i s su e. 6 Du ri n g t h att i m e p eri o dn o l av i s h
ex p en d i tu res were m ad e--t h e co up l e d i dn o t p ay o ff t h ei r m o rt g ag e, p et i t i o n er
co n ti n u edt o dri ve t h e s am e u s ed car, an dcert ai n u t i l i t i es were d i sco n n ect edatth e
m ari t al h o m e fo r n o np aym en tdu ri n g th e y ears i n i s su e. Pet i t io n er was co m p l et el y
u n aware o f M s. Lem

m en s ’ em b ezzl em en ts ch em e u n t i l h er arres t . M s . Lem m en s
was s ub s equ en t l y

co n v i ct edo f h er cri m es i n No v em b er 2 0 1 1 an d s en t en cedi n J an u ary 2 0 1 2 . Pet i t i o n er s up p ort edM s . Lem m en s t h ro u gh th e cri m i n al p ro ceed in g s an dth e fi rs ty ear o f h er i n carcerat i o n; th ei r es tran g em en ti n 2 01 3 ,

6 M s . Lem m en s ’ du t i es atth e b l o o db an ki ncl u d edp ro ces si ng acco un t s p ay ab l e an di s su i ng th e req u i s i t e ch eck s t o v en ders . M s . Lem m en s em b ezzl edth e fu n d s b y draft i n g ch eck s t o h ers el f o r ad d i n g l arg e am o u n ts o f m o n ey t o h er p ay ch eck s an dcat eg ori zi n g th e am o u n t s as rei m bu rs em en t s . No tab l y , th e d ep o s i t s o f em b ezzl edfu n d s l arg el y

m irro redd ep o s i t s o f i n co m e fro m th e h om e i ns p ect i o n b u s i n es s i n qu an t i ty

an dam o u n t .- 5
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[* 5 ] h o wev er, l edh er t o fi l e fo r d i vo rce. Un d er t h e fi n al d i v o rce d ecree p et i t i o n er
an d M s . Lem

m en s are each l eg al l y

o b l i g at edt o p ay

o n e-h al f o f t h e 2 0 1 0 an d2 0 1 1 t ax l i ab i l i t i es . Pet i t i o n er, h o w ev er, al l eg es h e i n ten d ed t o ag ree o n l y t o p ay o n eh al f o f t he t ax l i ab i l i t i es at tri bu t ab le t o i t em s o th er t h an th e em b ezzl em en ti n co m e. II. Tax Retu rn s an dDefi ci en ci es Fo r 2 0 1 0 p et it i o n er g av e M s . Lem m en s h i s t ax i n fo rm at io n . Sh e t h en g av e h i s t ax i nfo rm at i o n al o n g wi th h er o wnt o a p ai dp rep arer s h e h i redt o p rep are t h e
co upl e’ s jo i n ti n co m e t ax retu rn (2 0 1 0 return ). Pet i t i o n er an dM s. Lem m en s rep o rt edad

ju s tedg ro s s i n co m e o f $ 32 7 ,7 1 6, i ncl u d i n g wag e i n co m e o f $ 1 17 ,5 7 1 , o th er i nco m e o f $ 1 62 ,9 5 1 , an db u s i nes s i n co m e o f $ 1 ,1 7 3. Pet i t i o ner an dM s . Lem m en s cl ai m edi t em i zedd edu ct i o n s o f $ 1 9 3 ,5 6 2, o f wh i ch $ 1 6 1,9 5 1 was g am b l in g l o s s es . 7 Th e 2 0 1 0 ret u rn was fi l edb efo re M s . Lem m en s’ arres ti n J u n e 2 0 1 1 ; p et i t i o n er d i dn o ts ee i t b efo re t h e p ai dp rep arer s ub m i t t ed i tel ect ro n i cal l y t o the In t ern al Rev en u e Serv ice (IRS). Fo r 2 0 1 1 p et it i o n er p ro v i d edh i s an dM s . Lem m en s ’ t ax i n fo rm at i o n t o th e
s am e p ai dp rep arer wh o h adp rep aredth e 2 0 1 0 retu rn t o p rep are t h ei r 2 0 1 1 jo i n t i n co m e t ax retu rn (2 0 1 1 retu rn ). Th e 2 0 1 1 ret urn rep o rt edad ju s t ed g ro s s i n co m e

7 On ei d a Cas i n o’ s reco rd s i n d i cat e M s . Lem m en s h adcas h b u y -i n s t ot al i n g $ 3 0 1 ,3 0 4 an dp et it i o n er h adcas h b u y -i n s t o t al i n g $ 1 14 ,6 6 5 b etween 2 0 0 8 an d 2 0 1 0
.- 6
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[* 6 ] o f $ 1 1 4 ,2 51 , i n cl u d i n g wag e i n co m e o f $ 5 8 , 6 06 , o th er i n co m e s p eci fi cal l y l ab el ed“ g am

b li ng wi n n in g s ” o f $ 1 1 ,5 0 8 , an db u si nes s i n co m e o f $ 4 6 ,3 5 4 . Th e
co upl e cl ai m edi t em i zedd educt i o ns o f $ 3 2 ,6 33 . Th e 2 0 1 1 retu rn was t i m el y fi l ed i n Ap ri l 2 0 1 2
. So m et i m e aft er M s . Lem

m en s ’ tri al the ret u rn s fo r 2 0 1 0 an d2 0 1 1 were
ex am i n ed . Fo r b o th y ears s o m e ad ju s t m en t s were at tri b ut ab l e t o th e o m i t ted
em bezzl em en ti n co m e an do th ers were n o t. Pet i t i o n er s eek s rel i ef o nl y fro m th o s e i t em s at tri b u t ab le t o th e o m it t edem b ezzl em en ti n co m e an d as s o ci at ed accu racy rel at ed p en al t i es . See s up ra n o t e 3
. Res p o n d en tp ro p o s edt o t al n etad ju s t m en t s o f $ 2 9 8 ,7 1 0 .1 4 fo r 2 0 1 0 , o f wh i ch $ 2 6 1 ,9 59
. 1 4 i s at tri b u t ab l e t o th e o m i t tedem bezzl em en t i n co m e. Th i s ad ju s t m en tcreat ed a d efi ci en cy o f $ 1 03 ,2 4 7 an d a s ect i on 6 6 6 2(a) accu racy rel at ed p en al ty

o f $ 2 0 , 6 4 9 .4 0 fo r 2 0 10
. Res p o n d en tp ro p o s edt o t al n etad ju s t m en t s o f $ 1 0 6 ,4 2 4 .9 4 fo r 2 0 1 1 , o f wh i ch $ 6 2 ,4 4 9.9 4 i s at tri b u t ab l e t o th e o m i t t edem b ezzl em en ti n co m e. Th i s ad ju s t m en tcreat ed a d efi ci en cy o f $ 2 5,9 1 2 an d a s ect i o n 6 6 6 2 (a) accu racy -rel at ed p en al ty o f $ 5 ,1 8 2 fo r 2 0 1 1
.- 7
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[* 7 ] III. Pet i t i o ner’ s Req u es tfo r Ad m i n i st rat i v e Rel ief OnJ an u ary

7 , 2 0 1 4 , p et i t i o n er s ub m i t t edt o th e IRS Fo rm 8 8 5 7 , Requ es tfo r In n o cen t Sp ou se Rel i ef, s eek i n g rel i ef fro m jo in tan d s ev eral l i ab i l i ty fo r t h e y ears i n i ss u e. Pet i t i o n er rep o rt edt o t al m o n th l y i n co m e o f $ 2 , 9 2 9 co n s i s t i n g o f wag es
o f $ 2 , 8 0 0 an dv et eran s d i s ab i l i ty p aym en t s o f $ 1 2 9
. Pet i t i o n er rep o rt edt o tal
m o nt h l y ex p en s es o f $ 3,5 0 0. OnJ u ne 2 5 , 2 01 4 , res p o n d en tm ad e a p rel i m i n ary d et erm i n at i on th at p et i t i o n er was en t i t l ed t o fu l l rel i ef fo r t h e y ears i n i s su e u n d er s ect i on 6 0 1 5 (b ). OnJ u l y 2 3 , 2 0 14 , M s . Lem m en s was n o t i fi ed o f t h e p rel i m i n ary d eci s i o n an dfi l ed
a s t at em en to f d i s ag reem en t wi th res p o n d en t . Res p o n d en t’ s Offi ce o f Ap p eal s
reco n s i d ered p et i ti o n er’ s req u es tan dm ad e a fi n al d et erm i n at i o n th atp et i t i o n er
was i n el i g i b l e fo r rel ief fo r t h e y ears i n i s s ue u n d er s ect i o n 6 0 1 5 (b ), (c), an d(f). Pet i t i o ner an d M s. Lem

m en s’ d i v o rce p ro ceed i n g s an dp et i t i o n er’ s cl ai m fo r rel i ef fro m jo i n t an ds ev eral l i ab i l i ty were p en d in g atth e s am e t i m e. OnM arch 1 4 , 2 0 1 5 , p et i t i o n er s i g n ed th e d i v o rce ag reem en t aft er M s . Lem m en s h ad ap p eal edres po n d en t ’ s p rel i m i n ary d et erm i n at i o n g ran t i n g p et i ti o n er rel i ef b u t b efo re res p o nd en th adm ad e a fi n al d et erm i n at i o n d en y in g rel ief. Pet it i on er an d M s . Lem m en s ’ d i v orce ag reem en ts t at edth atp et i t i o ner an dM s . Lem m en s each ag reedt o p ay

o n e-h al f o f th e 2 01 0 an d 2 01 1 t ax l i ab i l i t i es , i ncl u d i n g th e l i ab i l i t i es- 8
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[* 8 ] ari s in g fro m

th e em b ezzl em en ti n co m e. Pet i t i o n er cl ai m s h e ag reedt o p ay
o n e-h al f o f t h e o u t s t an d in g l iab i l i t i es th atd i d n o ti n cl u d e an y p ort i o n o f t h e l i ab i l i t i es ari s i n g fro m

the em b ezzl em en ti n co m e. Pet i t i o ner i s a d i s ab l edv et eran wh o co n t i n u es t o s u ffer fro m p o s t trau m at i c
s tres s d i s o rd er (PTSD). As a res u lto f M s. Lem m en s ’ arres tan dco n v i ct i o n , th e d i v o rce, an dh is fi n an ci al p ro b l em s , p et i t i on er s u ffered a m en t al b reak d o wn . As
o f t h e t i m e o f t ri al p et i t i o ner was reco v eri n g fro m h i s m en t al h eal th p ro b l em s th ro u g h m ed i cat i o n an dp art i ci p at i o n i n a PTSD t reat m en tp ro g ram ata v et eran s h o s p it al
. Pet i t i o ner h as h adfo u r jo b s an dm o v ed th ree t i m es s i n ce fi l i n g h is i n i t i al cl ai m fo r rel ief. As o f t h e t i m e o f tri al p et i t i o n er was em p l o y edata fo o d p ack ag i ng co m

p an y earn i n g $ 6 9 ,0 0 0 p er y ear.

OPINION Gen eral ly , m arri ed t ax p ay ers m ay fi l e jo i n tFed eral i n co m e t ax retu rn s wi t h th ei r s po u s es i f t h ey

el ect t o do s o . Sec. 6 0 1 3 . Sect i o n 6 0 1 3 (d )(3 ) p ro v i d es th ati f a jo i n t retu rni s fi l edeach s p o u s e i s jo i n t l y an ds ev eral l y

l i ab l e fo r t h e en ti re t ax du e fo r th aty ear. A req ues ti ng s p o us e m ay b e rel i ev edfro m jo i n tan d s ev eral l i ab i l i ty un d er s ect i on 6 01 5 , h o wev er, i f cert ai n co n d i t io n s are m et .- 9
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[* 9 ] Sect io n 6 0 1 5 p ro v i des th ree p o t en t i al av en u es t o rel i ef u n d er s ub s ect i o n s (b ), (c), an d(f). A req u es t i n g sp o u s e wh o s at i s fi es th e co n d i t i o n s o f s ect i o n 6 0 1 5 (b ) m ay

b e rel i ev edo f l i ab i l i ty

fro m an u nd ers t at em en to f t ax at tri bu t ab l e t o th e o th er s po us e. Si m il arl y , a req u es t i n g s p o u s e wh o s at i s fi es the co n di t i o n s o f
s ect i on 6 0 1 5 (c) m ay

h av e h i s o r h er l iab i l it y

fo r a d efi ci en cy

l i m i t edt o th e p o rt i o n
o f t h e d efi ci en cy

al l o cat edt o h i m

o r h er u n d er s ect io n 6 01 5 (d ). Fi n al l y , th e req u es t i ng s p o u s e m ay

b e g ran t edrel i ef fro m

an y u np ai dt ax o r an y d efi ci en cy i f rel i ef i s n o t av ai l ab l e u n d er s ect i o n 6 0 1 5 (b ) o r (c) an di two ul d b e i n equ i t ab l e t o h o l dth e req u es t i n g s po u s e l iab l e. Sec. 6 0 1 5 (f). Th e Co u rt m ay d et erm i n e wh et h er p et i ti o n er i s el i gi b l e fo r rel i ef u nd er s ect i o n 6 0 1 5 (b ), (c), o r (f) fo r t h e y ears i n i s s u e. I. Rel i ef Un d er Sect io n 6 0 1 5 (b ) Sect io n 6 0 1 5 (b )(1 ) p ro v i d es th ata req u es t i n g s p o us e s h al l b e rel iev edo f jo i n t an ds ev eral l i ab il i ty fo r a p art i cu l ar y ear i f each o f t h e fo l l o wi ng req u i rem en t s i s m et : (A) a jo i n treturn was fi l edfo r t h e y ear i n i s s u e, (B) t h e retu rn co n t ai n s an u n ders t at em en tat tri b ut ab l e t o an erro n eo us i t em o f t h e
n o n req u es ti n g s p ou s e, (C) t h e requ es t i n g s p o u se es tab l is h es th ati n s ig n i n g th e retu rn h e o r s h e d i dn o tkno w an dh adn o reas o n t o kn o w o f t h e u n d ers t at em en t , (D) i t i s i n equ i t ab le t o h o l d th e req u es t i ng s p ou s e l i ab l e fo r th e d efi ci en cy- 1 0 -

[* 1 0 ] at tri b u t ab l e t o th e u nd ers t at em en t , an d (E) t h e requ es t i ng s p o u s e’ s cl ai m fo r rel i ef i s t i m el y . Fai l u re t o m eeta s in gl e o n e o f t h es e req ui rem en t s p recl ud es rel i ef u n d er
s ect i on 6 0 1 5 (b ). Al t v . Co m m i s s i on er, 1 19 T.C. 3 0 6 , 3 1 3 (2 0 0 2 ), aff’ d , 1 0 1 F. Ap p ’ x 3 4 (6 th Ci r. 2 0 0 4 ). Res po n d en td o es n otd i s p u t e t h atp et i t i o ner fi l edjo i n t retu rn s wi th M s . Lem

m en s fo r 2 0 1 0 an d2 0 1 1 o r t h atp et i t i o n er’ s req u es twas t i m el y . Res p o nd en t al s o co n ced es thatth e em b ezzl em en t i nco m e i s wh o l l y at tri b u t ab l e t o M s . Lem

m en s . Res p o n den targ u es , h o wev er, t h at p et i t io n er h as n ot
s at i s fi edth e req u i rem en ts o f s ub p arag rap hs (C) an d (D) o f s ect i o n 6 0 15 (b )(1 ). Th erefo re, p et it i o n er b ears th e b u rd eno f es t ab l i sh i n g t h ath e d i dn o tkno w o r h av e
reas on t o kn o w o f t h e u n ders t at em en t s wh en th e 2 01 0 an d 2 01 1 retu rn s were
s i gn edan dth ati ti s i neq u i tab l e t o h o l d h i m l i ab l e fo r t h e d efi ci en ci es at tri bu t ab l e t o the u n d ers tat em en ts . A. Sect io n 6 0 1 5 (b )(1 )(C) Un d er s ect i o n 6 01 5 (b )(1 )(C) t h e req ues t i n g s p o u s e m u s t es tab l is h th ati n
s i gn i n g th e ret u rn h e o r s h e d i dn o tkn o w an dd i d n o th av e reas o n t o kn o w th e retu rn co n t ai n edan u n d ers t at em en t . Al tho u gh p et i ti o n er d i dn o tp h y si cal l y s i g n th e 2 0 10 o r 2 0 11 retu rn , h e t aci t l y co ns en t ed t o th e el ect ro n ic fi l i n g o f each retu rn . See s up ra p p . 5 -6 . Th erefo re h i s kn o wl ed g e, o r l ackth ereo f, m ay b e d et erm i n edas- 1 1 -

[* 1 1 ] o f t h e d at e t h e retu rn s were fi l ed . See Rei l l y -Cas ey v . Co m m is s i o n er, T.C. M em o. 2 0 1 3 -2 9 2 , at * 8 (ci ti n g Rei fl er v . Co m m i s s i o n er, T.C. M em o . 2 01 3 -2 5 8 , at
* 1 5 (ex p l ai n i n g th e t aci tco n s en tru l e)). A requ es t in g s p o u s e h as kn o wl ed g e o r reas on t o kn ow o f an u n d ers t at em en t i f h e o r s he act u al l y

kn ew o f t h e u n ders t at em en to r i f a reas on ab l e p ers o n i n
s i m i l ar ci rcu m st an ces wo u l dh av e kn o wno f t he u n ders t at em en t. Sec. 1 .6 0 1 5 -2 (c), In co m e Tax Reg s . Un d er cert ai n ci rcu m s t an ces , h owev er, a req u es ti n g s po u s e
m ay recei v e p art i al rel i ef i f h e o r s h e s at i s fi es ev ery req ui rem en tex cep tth e kn o wl ed g e req u i rem en to f s ect i o n 6 0 1 5 (b )(1 )(C). See s ec. 6 0 1 5 (b )(2 ). Part i al rel i ef i s av ai l ab l e o n ly

i f th e requ es t i n g s p o u s e es t ab l i sh es h e o r s h e d i d n otkn o w
o r h ad no reas o n t o kn o wth e fu l l ex t en to f t h e u n d ers t at em en t . Id
. Ins u ch a cas e, th e req u es t i n g s po u s e m ay b e rel i ev edo nl y

fro m l i ab i l i ty at tri b ut ab l e t o th e p o rt i on o f t h e u n d ers t at em en to f wh i ch h e o r s h e l ack edkn o wl ed ge.

1
. Actu al Kn o wl ed g e Al l th e fact s an dci rcu m st an ces m u s t b e co n s i d eredwh en d et erm i n i n g wh et h er a req u es t in g s p o u s e h adactu al kn o wl ed g e o f an u n d ers t at em en t. Sec. 1 .6 01 5 -3 (c)(2 )(i v ), In co m e Tax Reg s . Fact ors i n d icat i v e o f act u al kn o wl ed g e i n cl u d e d el i b erat e effo rt s b y th e req u es ti n g s p o u se t o av o i dl earn i n g ab o u tan
erro neo u s i t em

an d jo i n to wn ers h i p o f t h e p ro p ert y th atres u l t edi n the erro n eo u s- 1 2 -

[* 1 2 ] i t em . Id
. Fu rt her, i n o m i t t edi n co m e cas es , actual kn o wl ed g e i n cl u d es kn o wl ed g e o f t h e recei p t of t h e i n co m e. Id . s ub d i v . (i )(A). Kn o w l ed g e o f t h e
s o u rce o f the i nco m e, h o wev er, i s n ots u ffi ci en tt o es tab l i s h actu al kn o wl ed g e. Id
. s ub d iv . (i i i ). Th u s t h e fact th atp et i t i o n er kn ew h i s wi fe was em pl o y edas an
acco u n t an tatth e b l o o db an k d o es n o tes tab l i s h actu al kn o wl ed ge o f h er
em bezzl em en t . It is wel l es t ab l is h ed th ati n o m it t edi n co m e cas es , th e s p ou s e’ s actu al kn o wl ed g e o f t h e u n d erl y in g tran s act i o n th at p ro du cedth e i n co m e i s s uffi ci en tt o p recl u d e rel i ef. Ch es h i re v . Co m m i ss i on er, 2 8 2 F.3 d 3 26 , 3 33 (5 th Ci r. 2 0 0 2 ), aff’ g 1 1 5 T.C. 1 8 3 (2 0 0 0 ). Th i s Co u rth as i n t erp ret edth e s t an d ardt o b e an “ actu al
an d cl ear awaren es s ” o f t h e ex i s t en ce o f t h e o m i t t edi t em . Id . at3 3 7 (q u o t i n g Ch es h i re v . Co m

m i s s i o n er, 1 1 5 T.C. at1 9 5 ). In em b ezzl em en t i n co m e cas es , kn o wl ed g e o f t h e u n d erl y in g tran s act i o n m ean s kn o wl ed g e o f t h e em b ezzl em en t . Ev an s v . Co m

m i s s i o n er, T.C. M em o . 2 01 0 -1 99 (fi n d in g th at req u es t i n g s p o u s e kn ew o r h adreas o n t o kn ow o f u n d ers t at em en t wh ere n on req u es t i n g s p o us e was b ei n g p ro s ecu tedfo r em

b ezzl em en twh en return was s i g ned ), aff’ d , 5 0 7 F. Ap p ’ x 6 4 5 (9 th Ci r. 2 0 13 ). Th e 2 0 1 0 retu rnwas fi l edb efo re M s . Lem m en s’ arres ti n J u n e 2 0 1 1 . As
s ect i on 6 0 1 5 (b )(1 )(C) refers t o kn o wl ed ge at the t i m e t h e ret u rn was s i gn edo r- 1 3 -

[* 1 3 ] fi l ed , ev en t s o ccu rri n g aft er t h e fact are i rrel ev an t. Pet i t i o n er t es t i fi edth at h e was n o t aware o f M s . Lem m en s ’ em b ezzl em en tu n t i l th e d at e o f h er arres t , aft er
s h e was t ak en i n t o cu s to dy . Th e Co u rtfi n d s p et i t i o n er t o b e h i g h l y cred i b l e an d accep t s h i s t es t i m on y . Th e Co u rtfi n d s th atp et i t io n er d i dn o th av e actu al kn o wl ed g e o f t h e em

b ezzl em en ti n co m e atthe t i m e t he 2 0 1 0 return was fi l ed . See Hep ler v
. Co m

m i s s i o n er, T.C. M em o . 1 9 9 0-4 9 0 (fi n d i n g t ax p ay er l ack edactu al kn o wl ed g e o f s p o u s e’ s em b ezzl em en ti n co m e o n th e b as i s o f t ax p ay er’ s cred i b l e t es t i m o ny ). Th e 2 0 1 1 retu rnwas fi l edaft er M s . Lem m en s’ co nv i ct io n . Th e Co urtfi n d s th atp et i t i o n er d idh av e act u al kn o wl ed g e o f t h e em b ezzl em en ti n co m e wh en th e 2 0 1 1 retu rn was t im el y

fi ledi n Ap ri l 2 0 1 2 . M s . Lem m en s was arres t edi n J u n e 2 0 1 1 , co n v i ct edi n No v em b er 2 0 1 1 o f em

b ezzl in g $ 4 8 5 ,6 8 1 , an ds en ten cedt o i n carcerat i on i n J an u ary 2 0 1 2 an d o rd ered t o p ay res t i tu t io n . Th erefo re, as o f t h e d at e t h e 2 0 1 1 retu rn was fi l edp et i ti o n er h adactu al kn o wl ed g e o f t h e
em bezzl em en ti n co m e an dth ati twas n o t rep o rt edo n th e retu rn . As p et i t i o n er kn ew o f t h e u n d ers t at em en twh en th e ret u rn was fi led , h e i s n o ten t it l edt o rel i ef
u n d er s ect i o n 6 0 1 5 (b ) fo r 2 0 11
.- 1 4 -

[* 1 4 ] 2
. Reas on To Kn o w Th e Co u rtm

u s tn o wd et erm i n e wh et h er p et i t i o n er h adreas o n t o kn o w o f th e
u n d ers t at em en twh enth e 2 0 1 0 retu rn was fi l ed
. A requ es t i ng s p ou s e h as reas o n t o kn o w o f an u n d ers t at em en ti f a reas o n ab l e p ers o n i n s i m i l ar ci rcu m s t an ces wo u l d h av e kn o wn o f th e u nd ers t at em en t . Sec. 1 .6 01 5 -2 (c), In co m e Tax Reg s . Th e
s t an d ardi s n o tab s tract , h o wev er, as th e reas o n ab l y p ru d en tt ax p ay er m

u s tb e p l aced i n the p art i cu lar ci rcu m s t an ces o f t h e req u es t in g s p o u s e. Res s er v . Co m m i s s i o n er, 7 4 F.3 d1 5 2 8 , 1 5 3 6 (7 th Ci r. 1 9 9 6 ), rev ’ g T.C. M em o . 1 99 4 -2 4 1
.

“ Co u rt s h av e i n t erp ret edth e reas o n-t o -kn o w el em en tt o en co m pas s two
s ep arat e t y

p es o f co n s tru ct i v e kn o wl ed g e.” Greer v . Co m m is s i o n er, 5 95 F.3 d3 3 8 , 3 4 5 (6 th Ci r. 2 0 10 ), aff’ g T.C. M em o . 2 0 09 -2 0 . Fi rs t , a s p o u s e m ay kn o w fact s
s u ffi ci en tt o g i v e h i m

o r h er reas o n t o kn ow o f an u nd ers t at em en trefl ect edo n th e retu rn . Id . Seco n d, ev en i f a s p o u s e d o es n o th av e reas o n t o kn o w o f an
u n d ers t at em en t , th e s p ou s e m ay kn ow fact s s u ffi ci en tt o p l ace h i m o r h er o n n o t i ce
o f a p o ss i b l e u nd ers t at em en t , g i v i n g ri se t o a du ty o f i nqu iry . Id . (ci t i n g Ki s tn er v . Co m m i s s i o n er, 1 8 F.3 d1 5 2 1 , 1 5 2 5 (1 1 th Ci r. 1 9 9 4 ), rev ’ g T.C. M em o . 1 9 9 1 -4 6 3 , an d Pri ce v . Co m

m is s i o n er, 8 8 7 F.2 d9 5 9, 9 6 5 (9 th Ci r. 1 9 8 9)). Pu t an ot h er way , i f a s p o u s e h as reas o n t o kn o w o f a p o s s i b l e u n d ers t at em en t , th e s p ou s e i n cu rs a du ty o f i n qu i ry . Res s er v . Co m m i s si o n er, 7 4 F.3 d at1 5 4 1. A s p o us e h as- 1 5 -

[* 1 5 ] co ns tru ct i v e kn o wl ed g e o f an u n d ers t at em en ti f s u ch a du ty ari s es an di ti s
n o td i s ch arg ed
. Id
. Al l th e fact s an dci rcu m st an ces are co ns i d ered i n d et erm i n in g wh et h er a req u es t i ng s p o u s e h adreas o n t o kn o w o f an u n d ers t at em en t. Sec. 1 .6 0 1 5 -2 (c), In co m e Tax Reg s . Pri ce v . Co m m i s si o n er, 8 8 7 F.2 d9 5 9 , a d eci s i on p red at i n g
s ect i on 6 0 1 5 (b ) an dth e reg u lat i o n s th ereu n d er, i d en t i fi edth e fo l l o w i n g fact o rs as rel ev an t : (1 ) t he req ues t i ng s p o u s e’ s l ev el o f edu cat i o n ; (2 ) t h e req u es t i ng
s p o u se’ s i n v o l v em en ti n th e fi n an ci al an d b u si nes s act i v i ty o f t he fam i l y ; (3 ) t h e p res en ce o f ex pen d i tu res th atap p ear l av i s h o r un u s u al wh en co m pared t o th e fam i l y ’ s p as tl ev el s o f i n co m e, s t an d ard o f l i v i ng , an ds p en d i n g p at tern s ; an d (4 ) t h e cu l p ab l e s p o u se’ s ev as i v en es s an d d ecei t ab ou tth e fam i l y ’ s fi n an ces . Pri ce
v . Co m m i s s i o n er, 8 8 7 F.2 dat9 6 5 . Th e U.S. Co urto f Ap p eal s fo r t he Sev en th Ci rcu i t , t o wh i ch th i s cas e i s ap p eal ab l e ab s en ta s t i pu l at i o n t o th e co n trary , h as
en d ors edth e Pri ce fact o rs wh en d et erm in i n g wh et h er a s p o us e h adreas o n t o kn ow
o f an u nd ers t at em en t . Res s er v . Co m m i s s i on er, 7 4 F.3 dat 1 5 3 6 . Gen eral ly , th e
s am e fact o rs are co n si d eredwh en d et erm i n in g wh et h er a s p o u s e h ada du ty o f i n qu i ry an dwh et h er t h atdu ty was d i s ch arg ed . Greer v
. Co m m i s s io n er, 5 9 5 F.3 d at3 4 8 ; Res s er v . Co m

m i s s io ner, 7 4 F.3 dat1 5 4 1
.- 1 6 -

[* 1 6 ] Reg u l at i o ns u n d er s ect i o n 6 0 1 5 (b ) i d en t i fy s i x ad d i t i o n al , n on ex h au s t i v e fact ors th atare rel ev an tt o th e i n qui ry : (1 ) t h e n atu re o f th e i t em an d th e am o u n t
o f t h e erro n eo us i tem

rel at i ve t o o th er i t em s ; (2 ) t he co upl e’ s fi n an ci al s i tu at i o n ; (3 ) t h e req u es t i n g s p ou s e’ s edu cat i o n al b ack g ro u ndan db u si n es s ex peri en ce; (4 ) t h e ex t en to f th e req u es t i n g s p o u s e’ s p art i ci p at io n i n th e act i v i ty th atres u l t ed i n the erro n eo u s i t em ; (5 ) wh eth er t h e req ues t i n g s po u s e fai l edt o i n qui re, ato r b efo re t h e t i m e th e ret u rn was s i g n ed , ab o u t i t em s o n t h e ret u rn o r o m i t t edfro m th e ret urn th ata reas on ab l e p ers o n wo u l d ques t i o n ; an d(6 ) wh et h er t h e erro n eo u s i t em rep res en t eda d ep arture fro m a recu rri n g p at t ern refl ect edi n p ri o r y ears ’ retu rn s . Sec. 1 .6 0 1 5 -2 (c), In co m e Tax Reg s. Fact o rs (2 ), (3 ), an d (5 ) l arg el y
o v erl ap wi th th e Pri ce fact o rs l ai do u tab o v e.

a. Edu cat i o n Pet i t i o ner h as an as s oci at e’ s d eg ree an d th u s h as s o m e p o s ts eco n d ary edu cat i o n . “ Th e cas es are cl ear, h o wev er, t h at i t i s fi n an ci al educat i on , n ot edu cat i o n i n g en eral , th at m at t ers .” Greer v
. Co m m i s s i o n er, 5 9 5 F.3 dat3 4 8 (ci t i n g Res er v . Co m

m is s i o n er, 1 1 2 F.3 d1 2 58 , 1 2 6 8 (5 th Ci r. 1 9 9 9 ), aff’ g i n p art , rev ’ g i n p artT.C. M em o. 1 9 9 5 -5 7 2 ). Th u s , wh i l e p et i t i o n er h as s om e p o s t s eco n d ary

edu cat i o n , h e d o es n o th av e fo rm al edu cat i o n i n b u s i n es s , acco u n t in g , o r fi n an ce. Ad di t i o n al l y , p et i t i on er’ s em p lo ym en tas a m ach i ne- 1 7 -

[* 1 7 ] o p erat or an dh i s h o m e i n s p ect io n b u s i n es s d i d n o treq u i re h i m t o acq u i re an y fi nan ci al s k i l l s . Thus , th i s fact o r fav o rs p et it i o n er.

b
. In v o l v em en t i n Fi nan ci al Affai rs M s . Lem m en s was em

p l o y edas an acco un t an t b efo re h er t erm i nat i o n an d
s ub s equ en tarres t fo r em

b ezzl em en t . Th e reco rds h o ws th atp et i ti o n er’ s ro l e i n th e
co upl e’ s fi n an ces , i f an y , was l i m i t ed . Al th o ug h p et i t io n er was act i v e i n t h e
o p erat i o n s o f t h e co upl e’ s h o m e i ns p ect i o n b u si n es s , h e p lay edn o ro l e i n
m an ag i n g i t s fi n an ces . M s. Lem m en s h ads up eri or kn owl ed g e i n th es e fi el d s , an d b efo re h er arres tp et i t i o n er h adtru s tedh er t o t ak e care o f t h ei r fi n an ci al affai rs . Befo re M s . Lem

m en s ’ arres t , p et i t i on er’ s i n v ol v em en t h adco n s i st edo f p ro v i d i n g h i s t ax i nfo rm at i o n t o Ms
. Lem m en s , wh o th en p ro vi dedth at i n fo rm at io n t o a p ai d p rep arer wh o p rep aredth e co up l e’ s retu rn s . Th erefo re, t h i s fact o r fav ors p et i t i o n er.
c. Lav i s h o r Un u s u al Ex p en d i tu res As i d e fro m

p et i t i o n er’ s an dM s . Lem m en s’ g am

bl i n g, the em

b ezzl edfu n d s d i dn o t i n creas e t hei r s tan d ardo f l i v i n g o r res ul ti n an y l av i s h ex p en d i tu res . Th ey d i dn o t p ay

o ff t h ei r m o rt g ag e, an dp et i t io n er co n t i n ued t o dri v e t he s am e u s edcar. In fact , cert ai n u t il i ti es were d is co n n ect edfo r l acko f p aym en t du ri n g th e y ears i n i s su e. Th es e fact s wo u l d n o th av e g i v en p et i ti o n er reas o n t o kn o wo f t he- 1 8 -

[* 1 8 ] em b ezzl em en ti n co m e o r creat edan y du ty t o i nqu i re. Pet i t i on er an dM s . Lem m en s d i d , h o w ev er, g am

bl e h eav i l y

atth i s t im e an d cl ai m edan i t em i zed d educt i o n fo r g am

b l in g l os s es o f $ 1 6 1 , 9 5 1 fo r 2 01 0 , b u tth ey al s o rep o rt ed $ 1 6 2 ,9 5 1 o f o th er i n co m e--p res u m ab l y l o s in g al m o stas m

u ch as th ey

wo n --an d rep o rt edad

ju s tedg ro s s i n co m e o f $ 32 7 ,7 1 6 fo r 2 0 1 0
. Th u s , th o ug h the co up l e g am b l edex t en si v el y , s o m et i m es wi th th ei r o wn
m o ney an ds o m et i m es wi th g am b l i n g wi n n in g s , th e num

b ers are n o tu nu s ual i n l i gh t o f t h ei r i n co m e an d u l t im at e wi n n i n g s. Pet i t i o ner t es t i fi edth ath e wo u l d g am b l e $ 1 0 0 o n a s l o tm ach i ne an dp l ay an y wi n ni n g s fo r s ev eral h o u rs . Al th o u g h h e m ig h t wi n o r l os e t h o u san d s o f d o l l ars p lay i ng th e s l o t s , p et i t i on er v i ewedi tas h av in g s p en to n ly

th e $ 1 0 0 h e i n i ti al l y

p u t i n . Pet i t i o ner at tri b u t edth e av ai l ab i l i ty o f fu n d s wi th wh i ch t o g am bl e t o th ei r
s al ari es an dth e s u cces s o f t h e h o m e i n sp ect i o n b u s in es s . As p et i t i o n er t ru s t ed M s . Lem m en s t o h an d l e t h e fam i l y fi n an ces an dh ada g en eral kn o wl ed g e o f t h ei r i n co m e, th e g am

b l i n g ex p en s es wh en co m p aredt o th e wi n n i n g s wo u ldn o th av e
s eem edl av i s h o r u n u s u al t o a reas on ab l e p ers on i n p et it i on er’ s ci rcu m s t an ces . Pet i t io n er t es t i fi edth at , as i d e fro m th e g am bl i n g ex p en s es , n o l av i s h ex p en d i tu res
were m ad e an dth at , o n th e b as i s o f h is kn o w l ed ge o f t hei r wag e an d b u s i n es s i n co m e, th e g am

b l i n g ex p en s es were n oto u t o f l i n e g i ven th e co up l e’ s av ai l ab l e- 1 9 -

[* 1 9 ] i n co m e. Th e Co u rt fi n d s p et i t i o n er’ s t es t i m o n y o n th i s p o i n tcred i b le. Th erefo re, t h i s fact or al s o fav o rs p et i ti o ner.

d
. No n requ es t in g Sp o us e’ s Ev as iv en es s o r Decei t Pet i t i o ner was u n aware o f M s. Lem m en s ’ em b ezzl em en tu n ti l th e d ay

s h e
was arres t edi n J u n e 2 0 1 1 . Ad d i t i o n al ly , fi n an ci al reco rd s s h o w th atM s . Lem m en s d ep os i t edth e em

b ezzl edfu nd s i n t o th e jo i n tacco u ntu s ed fo r h er wag es
an d th e h o m e i n s p ect i on b u s i n es s . Bo th the b u s in es s i n co m e an d t h e em b ezzl ed fu n d s were d ep o s i t edv i a ch eck s m ad e o u tt o M s . Lem m en s i n am o u n t s i n d i s t in g ui s h ab l e fro m

o n e an o th er. M s . Lem

m en s al s o em

b ezzl edfu n ds b y art i fi ci al l y

i n creas i ng h er p ay ch eck . Gi v en the co n s t an ts tream o f d ep o s i t s t o an d wi th drawal s fro m

th e jo i n tacco u n to f b u s i n es s i n co m e, wag es , ex pen s es an d rei m b u rs em en t s , o n l y

a d et ai l edrev i ew o f t h e fi n an ci al reco rd s wo u l dh av e
rev eal edth e em

b ezzl em en ts ch em e. As p et i t i o n er t ru s t edM s . Lem m en s t o h an d l e th e fam i l y ’ s fi n an ces b ecau s e o f h er s k i l l s as an acco u n t an t , h e h adn o reas o n t o
co n du ct s u ch a rev i ew b efo re h er arres t . Th erefo re, th i s fact or fav ors p et i ti o n er.

e. Natu re an d Am o un t o f th e It em Reg u l at i o ns u n d er s ect i o n 6 0 1 5 d efi n e an “ it em ” as “ thatwh i ch i s req u i red t o b e s ep arat el y

l i s tedo n an i n d i v idu al i n co m e t ax retu rn o r an y req u i red at t ach m en t s . It em s i n cl u d e, b u tare n o t l im it ed t o, g ro s s i n co m e, d edu ct io n s ,- 2 0 -

[* 2 0 ] cred i t s , an d b as i s .” Sec. 1 .6 01 5 -1 (h )(3 ), In co m e Tax Reg s . An“ erro n eo u s i t em ” i s d efi n edas “ an y

i t em res u l t i n g i n an u n d ers tat em en to r d efi ci en cy i n t ax t o th e ex t en tth ats u ch i t em

i s o m it t ed fro m , o r i m

pro p erl y rep ort ed(i n cl ud i n g i m p ro p erl y ch aract eri zed ) o n an i n d i v i du al t ax retu rn . ” Sec. 1 .6 0 15 -1 (h )(4 ), In co m e Tax Reg s . Res p o n d en td et erm i n edth at em b ezzl em en ti n co m e o f $ 2 61 ,9 5 9 was o m i t t ed fro m th e 2 0 1 0 retu rn . Al th o u g h thats eem s l ik e a l arg e am o u n to f m o n ey wh en
v i ewed as a wh o l e, i ti s n o ta fi g u re t h atwo u l dh av e b een s ep arat el y l i s t edo n a t ax retu rn . M s . Lem

m en s ’ m et h odo f em

b ezzl em en tm ad e t h e p o s s i b il i ty o f d et ect i o n b y p et i t i o n er rem o te. Wh en each d ep o s i to f em b ezzl edfu n d s i s v i ewed as a
s ep arat e t ran s act i o n , g i v in g ri s e t o a s ep arat e i t em o f i n co m e, h o wev er, th e n atu re
an d am o u n to f t he em

b ezzl em en ti n co m e i s n o t o u t s t an d i n g . As M s . Lem m en s
em bezzl edth e fu n d s i n s ep arat e t ran s act i o n s o v er a s ev eral -y ear p eri o dv i a i n creas edwag es an dd ep o s it s th atwere v i rtu al ly i n d i s t i n gu i sh ab l e fro m

th o s e recei v edb y

th e h o m e i n s p ect i o n b us i n es s , rev i ew o f t h e fi n an ci al s t at em en t s
s h o wi n g th e d ep o s i t s wo u l d n o th av e g iv en p et i t i o ner reas o n t o kn ow o f t h e
em bezzl em en ti n co m e o r p l aced h i m o n n ot i ce t h ereo f. Th erefo re, t h i s fact o r fav o rs p et i t i o n er.- 2 1 -

[* 2 1 ] f. Req u es t i n g Sp o us e’ s Part i ci p at i o n i n th e Act iv i ty As ad dres s edab o v e, p et i t i o n er was u n aware o f M s . Lem m en s’
em bezzl em en ts ch em e b efo re h er arres tan dt o o k n o p arti n i t . M s . Lem m en s ap p eal edres po n d en t ’ s d et erm i n at i o n g ran t i n g p et i t i o n er rel i ef an dwas b ri efl y a p art y t o th i s act io n as an i n t erv en o r. In M s . Lem m en s ’ s t at em en to f d i sag reem en t wi th res p o n d en t ’ s p rel im i n ary g ran to f rel i ef, s h e al l eg edp et i t i o n er was aware o f h er em bezzl i ng b utt o o kn o act i o n b ecau se h e was p ers on al l y b en efi t i n g fro m

th e
em bezzl em en ti n co m e. M s . Lem m en s p ro v i dedn o p ro o f o f th is al l eg at i o n , h o wev er, an dv o l u n t ari l y wi th drew as i n t erv en or i n th i s cas e. Th e Co u rtg i v es l i tt l e wei g h tt o M s . Lem

m en s ’ al l eg at i o n s. Th erefo re, t h i s fact o r fav o rs p et i t i o n er. g . Dep artu re Fro m

Pri or Ret urn s M s . Lem m en s was co n v i ct edo f em b ezzl i ng fu n d s fro m

h er em pl o y er o v er
s ev eral y ears , i n cl u d i n g 2 0 10 an d2 0 1 1 . Res p on d en td et erm i n edth e em b ezzl ed fu n d s were o m i t t edfro m

i n co m e fo r 2 0 0 9, 2 0 1 0 , an d2 0 1 1, the o n l y y ears fo r wh i ch retu rn s were ex am i n ed . Thu s , i t ap p ears thati n co m e was co n s i s t en t l y
o m it t edfro m

th ei r retu rn each y ear. To th e ex t en tth i s fact or i s rel ev an t i tfav o rs p et i t i o n er. Ex am in at i o n o f t h e rel ev an tfact o rs l ai do u tab o v e i n d i cat es th at p et it i o n er d i dn o t kn o w o r h av e reas o n t o kn o w o f t h e u n d ers t at em en tat tri b u t ab l e t o th e- 2 2 -

[* 2 2 ] o m i t t edem

b ezzl em en ti nco m e b efo re J u ne 2 0 11 . No r d o th e fact o rs i n d i cat e th atp et i t i o n er h adan y

du ty o f i n qu i ry . Pet i t i o ner’ s educat i o n an dcareer
ex p eri en ce d o n otp o rtray a fi n an ci al l y s o p h i s t i cat edi n d i v i du al
. Fu rth er, h e d i d
n o tco nt ro l th e h o u s eh o ld fi n an ces an dd i d n o t p art i ci p at e i n p rep ari n g th e 2 0 1 0 retu rn b ey o n dp ro v i d i n g h i s t ax i n fo rm at i o n . Nei ther p et it i on er’ s l acko f p art i ci p at i o n i n th e m an ag em en to f t h e h o u s eh o l do r b u si n es s fi n an ces n o r h i s l ack
o f ex am in at i o n o f fi n an ci al reco rd s were at t em p t s t o av oi dl earn i n g o f t h e
em bezzl em en ti n co m e; rat h er, i twas th e res u lto f h i s rel i an ce o n h i s s p o u s e, a trai n edacco un t an t. Gi v en M s . Lem

m en s ’ s k i l l as an acco un t an t , p et i t io n er’ s i n v o l v em en ti n
o n l y the h o m e i n sp ect io n b us i nes s ’ o p erat i o n s , h i s g en eral kn o wl ed g e o f t h e
co upl e’ s i n co m e, an d t h e l acko f l av i sh o r u n u s ual ex p en di tu res , a reas o n ab l e p ers o n i n p et it i o n er’ s s h o es wo u l dn o th av e h adreas o n t o kn o w o f t he
em bezzl em en ti n co m e o m i tt edfro m th e 2 0 1 0 ret urn . Si m i l arl y , an y du ty o f i n qu i ry thatm ay

h av e ex i st edi s m etb y

p et i t i o n er’ s rel i an ce o n M s . Lem m en s ’
s k i l l s as an acco u n t an t . Th erefo re, t h e Co u rtfi nd s th atp et i ti o n er d i dn o tkn o w o r h av e reas o n t o kn ow o f t h e em b ezzl em en ti n co m e o m i tt edfro m th e 2 0 1 0 retu rn .- 2 3 -

[* 2 3 ] B. Sect io n 6 0 1 5 (b )(1 )(D) Fo r p et i ti o n er t o recei v e rel i ef u n d er s ect i on 6 0 1 5 (b ), i tm u s t al s o b e d et erm i n edth at , t ak i n g i n t o acco un tal l th e fact s an d ci rcu m s t an ces , i ti s i n equ i t ab l e t o h o l d h i m

l i ab l e fo r t h e p o rt i o n o f t h e d efi ci en cy at tri b ut ab l e t o th e
em bezzl em en ti n co m e o m i tt edfro m th e 2 0 1 0 ret urn . Sec. 6 0 1 5 (b )(1 )(D). Th e IRS h as i d en t i fi eds ev eral fact o rs i t co n s i d ers rel ev an t t o th i s i n qu i ry , wh i ch are l ai do u ti n reg ul at i o n s u nd er s ect i o n 6 0 1 5 (b ) an dg u id an ce i s s u edu n der s ect i o n 6 0 1 5 (f). See s ec. 1 .6 0 1 5 -2 (d ), In co m e Tax Reg s.; Rev . Pro c. 2 0 1 3 -3 4 , 2 0 1 3 -4 3 I.R.B. 3 9 7 . Th e Co u rtm ay co ns u l t th e fact o rs s etfo rt h i n th e IRS g u i d an ce wh en
rev i ewi n g th e Co m

m i s s i o n er’ s d en i al o f rel i ef o n equ it ab l e g ro u n d s b uti s n o t b o u n dt o fo l l o w them . See Pu l l i n s v . Co m m is si o n er, 1 3 6 T.C. 4 3 2 , 4 3 9 (2 0 1 1 ); M i n t on v . Co m

m i s s i o n er, T.C. M em o . 2 0 1 8 -1 5 , at* 1 2. Reg u l at i o ns u n d er s ect i o n 6 0 1 5 (b ) i d en t i fy

th e rel ev an t fact o rs as wh et h er: (1 ) t h e requ es ti n g s po u se
s i gn i fi can t l y

b en efi t ed , d i rect l y

o r i n d i rect l y , fro m

th e u n d ers t at em en t ; (2 ) t h e
n o n req u es ti n g s p ou s e h as d es ert edth e req u es t in g s p o u s e; (3 ) th e s p o u ses are d i v o rcedo r s ep arat ed ; an d(4 ) t h e req u es t in g s p o u se recei v ed a b en efi tfro m th e
u n d ers t at em en to n th e jo i n tretu rn . Sec. 1 .6 0 1 5 -2 (d ), In co m e Tax Reg s. Th e reg u l at i o n s al s o i n d i cat e thato th er fact o rs i d en t i fi edas rel ev an twh en
co n si d eri n g equi t ab l e rel i ef u n d er s ect i on 6 0 1 5 (f) m ay b e ap p l i ed . Sec.- 2 4 -

[* 2 4 ] 1 .6 0 15 -2 (d ), In co m e Tax Reg s . To th is en d , th e Co m m i s s i o ner h as i d en t i fi edth e fo l l o w i n g fact o rs as rel ev an twh en d et erm i n i n g wh et h er i t wo u l db e i n equ i t ab l e t o h o l d a req u es t in g s p o u s e l i ab le u nd er s ect i on 6 0 1 5(f): (1 ) t h e
cu rren tm ari t al s t atu s o f t h e s p o u ses , (2 ) wh ether t h e req ues t i n g s p o u s e wo u l d
s u ffer an d eco n o m i c h ard s h i p i f rel i ef were n o tg ran t ed , (3 ) wh eth er t h e req u es t i n g
s p o u se kn ew o r h adreas o n t o kn o w o f t h e u n d ers t at em en t , (4 ) wh et h er ei th er
s p o u se h as a l eg al o b l i g at io n t o p ay th e o u t s t an d i n g Fed eral i n co m e t ax l iab i l i ty , (5 ) wh et h er t h e req ues ti ng s p o u s e s i g ni fi can t l y b en efi t edfro m the u n d ers tat em en t, (6 ) wh et h er t h e req ues ti ng s p o u s e h as m ad e a g o o d fai th effo rtt o co m p l y wi th th e i n co m e t ax l aws i n th e y ears fo l l o wi n g th e y ears fo r wh ich rel i ef i s s o u g h t , an d (7 ) wh et h er t h e req ues ti ng s p o u s e was i n p o o r m en t al o r p h y si cal h eal th at th e t i m e th e jo in tretu rnwas fi l ed . Rev . Pro c. 2 0 13 -3 4 , s ec. 4
. 0 3 (2 ), 2 0 1 3 -4 3 I.R.B. at4 0 0
- 4 0 3
. 1
. Si g n i fi can tBen efi t Reg u l at i o ns u n d er s ect i o n 6 0 1 5 (b ) d efi n e a s i g n ifi can t b en efi t as an y b en efi t i n ex ces s o f n o rm al s up p o rt . Sec. 1 .6 0 1 5-2 (d ), In co m e Tax Reg s . Tran s fers o f p ro p erty b et ween th e s po u s es m ay b e ev i d en ce o f a s i g n i fi can tb en efi t . Id . Th i s fact or wei g h s ag ai n s trel i ef wh ere t h e req u es t i n g s p o us e recei v es b en efi t s i n
ex ces s o f n o rm al s up p ort . Rev . Pro c. 2 01 3 -3 4 , s ec. 4 .0 3 (2 )(e), 2 0 1 3 -4 3 I.R.B. at- 2 5 -

[* 2 5 ] 4 0 2 . Gu i d an ce u n d er s ect i o n 6 0 15 (f) s t at es th atb en efi t s i n ex ces s o f n o rm al
s up p ort --i n cl u d in g l av is h ex p en d i tu res o r i n creas es i n th e s t an d ardo f l i v i n g --are
m i t i gat ed , h o wev er, wh ere t h e n o n req u es t i n g s p o u s e co n tro l l edth e h o u s eh o l do r b u s i n es s fi n an ces , m ak i n g th is fact o r n eu tral . Rev . Pro c. 2 0 13 -3 4, s ec. 4
. 0 3 (2 )(e). Wh ere t he req u es t i n g s p o u s e o b t ai n edl i t t l e o r n o b en efi tan d t h e n o n req u es t i n g
s p o u se b en efi t eds i gn i fi can t ly o r t h e n on req u es ti n g s po u se b en efi t edt o th e req u es t i ng s p o u s e’ s d et ri m en t , th i s fact o r wei g h s i n fav o r o f rel i ef. Id
. As d i s cu s s edab ov e, p et i t i o n er d i dn o trecei v e an y l av i s h g i ft s o r ex p eri en ce
an i n creas e i n s t an dardo f l i v i n g as a res ul to f t h e em b ezzl edi n co m e. 8 Fu rt h er,
an y b en efi tp et i t i o n er m ay

h av e o b t ai n ed i s n eg at edb y M s . Lem m en s ’ co n tro l o f th e h o us eh o l dan db u s i n es s fi n an ces . Th erefo re, t h is fact o r wei g h s i n fav o r o f rel i ef. 2
. M ari tal St atu s Equ i ty fav o rs rel i ef wh ere t h e req u es t i ng s p ou s e h as b een ab an d o n edb y th e
n o n req u es ti n g s p ou s e o r t h e s p o u s es are n o l o n g er m arri ed . Sp o u s es are n o l o n g er
m arri edi f t h ey

are d i v orced , l eg al l y

s ep arat ed , o r h av e n o tb een m em bers o f t h e
s am e h o u s eh o l d fo r a s p eci fi edp eri o d . Id . s ec. 4 .0 3 (2 )(a), 2 0 1 3 -4 3 I.R.B. at4 0 0
.

8 M s . Lem m en s p u rch as eda l awn m o w er fo r t h e fam il y res id en ce t h ats h e referred t o as a g i ft . Th e Co u rtd o es n o td eem th e co s to f a l awn m o wer t o b e a l av i s h g i ft , es p eci al l y

co m p aredt o th e o th er fu n d s s h e h an d l ed
.- 2 6 -

[* 2 6 ] Th is fact o r i s n eu tral i f t h e s p o u s es h av e rem ai n edm arri ed . As p et i t io n er
an d M s . Lem

m en s h av e b een d i v o rceds i n ce M ay 2 0 1 5 , th i s fact o r fav o rs p et i t i o n er. 3
. Eco n o m i c Hard s h ip Eco n o m i c h ard s hi p ex i s ts i f s at is fact i o n o f t h e t ax l i ab i l i ty , i n wh o l e o r i n p art , wo u l dres u l t i n th e req u es t i n g s p o u s e’ s b ei n g u nab l e t o m eeth i s o r h er
reas on ab l e b as i c l i v i n g ex p en s es . Id
. s ec. 4 0 3(2 )(b ), 2 01 3 -4 3 I.R.B. at4 0 1
. Wh ere t he req u es t i n g s p o u s e’ s i n co m e ex ceed s 2 5 0 % o f th e Fed eral p o vert y g u i d el i n es , th i s fact o r fav ors rel i ef i f m o n th l y i n co m e ex ceed s reas on ab l e b as i c l i vi n g ex p en s es b y

$ 3 0 0 o r l es s . Id . Atth e t i m e o f t ri al p et i t io n er h adan n u al i n co m e o f $ 69 ,0 00 , ex ceed i n g 2 5 0 % o f t h e Fed eral p o v ert y g u i d el i n es , an d
es t i m at edm o n th l y

ex p en ses o f $ 3 ,5 0 0. Pet i t i o n er t es t i fi edth ath i s m o nt h ly
ex p en s es h av e i n creas eds i nce h e rep o rt edth e $ 3,5 0 0 es t i m at e i n h i s req u es tfo r rel i ef b u t p ro v i d edn o ev i den ce t o s up p orth i s cl ai m . Pet i t i o ner’ s es ti m at edex p en s es , h owev er, d o n o tacco u n t fo r an y p aym en t
o b l i g at i o n ari s in g fro m

th e 2 0 1 0 o r 2 0 1 1 d efi ci en cy . Pet it i on er t es t i fi edth ath e i s
cu rren t l y u n ab l e t o p ay

al l o f h i s m on th ly

ex p en s es an dm

u s t p i ckan dch o o s e wh i ch cred i t ors are p ai deach m o n th . Res p o n d en th as d et erm i n eda d efi ci en cy o f $ 1 0 3 ,2 4 7 fo r 2 0 1 0, o f wh ich ap p ro x i m at el y 8 5 % i s at tri b u tab l e t o t h e- 2 7 -

[* 2 7 ] em b ezzl em en ti n co m e. Th u s , d en y in g p et i t i o n er rel i ef wo u l dres u l t i n an i n creas e i n h i s m o n th l y

ex p en s es , d ep en d i n g o n the p aym en tarran gem en tt o wh i ch p et i t i o n er an dres p o n d en tag reed . Wh i l e i ti s p o s s ib l e t hatd en y i n g p et i t i o n er rel i ef wo ul d res u l ti n m o n thl y p aym en t s th atwo ul d cau s e h i s m o n th l y ex p en s es t o
ex ceed h is m o n th ly

i n co m e, wi th o u tm o re i n fo rm at io n th e res u l ti s u ncl ear. Th erefo re, t h i s fact or i s n eu tral
.

4
. Kn o w l ed g e As th e Co u rtd et erm i n edab o ve t h atp et i t i o ner d i dn o t kn o w o r h av e reas o n t o kn o wo f t he em

b ezzl em en ti n co m e o m i t t edfro m th e 2 0 1 0 retu rn , th i s fact o r fav o rs p et i t i o n er.

5
. Leg al Ob li g at i o n Th i s fact o r fav o rs rel i ef wh ere t h e n o n reques t i n g s p o u s e h as th e s ol e
o b l i g at i o n t o p ay

an o u t s t an d i n g Fed eral t ax l i ab i l i ty u n der a b i n d i n g d i v orce d ecree o r o th er l eg al l y

b in d i n g ag reem en t . Rev . Pro c. 2 0 1 3 -3 4 , s ec. 4 .0 3 (2 )(d ), 2 0 1 3 -4 3 I.R.B. at4 0 2 . Th i s fact o r wei g hs ag ai n s trel i ef wh ere t he req ues t i n g
s p o u se h as th e s o le o b li g at i o n fo r t h att ax l i ab i li ty u n d er t he ag reem en tan di s
n eu tral wh ere b o th s p ou ses h av e an o bl i gat i o n t o p ay the o u ts tan d i n g l i ab i l i ty
u n d er t h e ag reem en t . As p et i t i o n er’ s 2 0 1 5 d iv o rce d ecree s t at es th ath e an dM s .- 2 8 -

[* 2 8 ] Lem

m en s are each l i ab l e fo r o n e-h al f o f t h e 2 0 1 0 an d2 0 1 1 Fed eral t ax l i ab i l i t i es , th i s fact o r i s n eu tral
. 9

6
. Co m

pl i an ce Res p o n d en tco n ced es th atp et i t i o ner i s cu rren t l y i n co m pl ian ce wi th h i s Fed eral i nco m e t ax o b l i g at i o n s . Th erefo re, t hi s fact o r fav o rs p et it i on er.

7
. Heal th Th i s fact o r m ay wei g h i n fav or o f rel i ef i f t h e req u es ti n g s p o u se was i n p o o r
m en t al o r p h y s i cal heal th atthe t i m e t h e ret urn s i n i s su e were fi l edo r atth e t i m e th e req u es tfo r rel i ef was m ad e. Id . s ec. 4 .0 3 (2 )(g ), 2 0 13 -4 3 I.R.B. at 4 03 . Rev
. Pro c. 2 01 3 -3 4 , s ec. 4 .0 3 (2 )(g ) s t at es th atth e IRS wi ll co n s i d er th e n atu re, ex t en t , an d du rat i o n o f t h e requ es t i n g s p o u s e’ s co n d i t i o n , i n cl ud i n g th e o n g o i n g eco n o m i c i m p acto f t h e i l l nes s. Pet i t io ner i s a d i s ab l ed v et eran wh o s u ffers fro m PTSD. Pet i t io n er t es t i fi edth atth e cu m u l at i v e effect o f M s . Lem m en s ’ arres t , th e en s u i n g
au d itan db an krup t cy , an dh i s s ub seq u en td i v o rce cau sedh i m t o h av e a m en t al b reak d own thatres ul t edi n th e l o s s o f h i s jo b . Si n ce th at t i m e p et i t i o ner h as h el d fo u r jo b s an dm o v edth ree t i m es wh i le d eal i n g wi th h is m en t al h eal th p ro b lem s . Th es e d i ffi cu l t i es h av e h ada s ig n i fi can teco n om i c i m p act . Pet i t i o ner t es ti fi edth at

9 Th e Co urt n o t es th e u nfo rtu n at e t i m i ng o f p et i ti o ner’ s s i g n i n g th e ag reem en taft er res p o nd en t ’ s p rel i m i n ary d et erm i n at i o n g ran t i n g rel i ef b u tb efo re res p o n d en t’ s fi n al d et erm i n at i on d en y i ng rel i ef. See s up ra p . 7
.- 2 9 -

[* 2 9 ] h e cu rren t l y

p art i ci pat es i n a PTSD t reat m en t p ro g ram ata v et eran s h o s p i t al
an d i s fi nal l y

b eg i n n i n g t o reco v er fro m th es e ev en t s . Becau se p et i ti o n er was
cu rren t l y u n d erg o i n g treat m en tatth e t i m e o f t ri al , th e Co u rt fi n ds thath i s m en t al h eal th p ro b l em s are o n g o i n g . Th erefo re, t h i s fact o r fav o rs rel i ef. Al l o f t h e fact o rs co n s id eredei th er wei g h i n fav o r o f rel i ef o r are n eu tral
. Si g n ifi can tl y , p et it i on er d i dn o tkn o w o r h av e reas o n t o kn o w o f t he o m i t t ed i n co m e an d d i d n o t o b t ai n a s i g n i fi can t b en efi t fro m th e i n co m e. Aft er
co n si d eri n g al l th e fact s an dci rcu m s t an ces , th e Co u rtfi nd s th ati two u l db e i n equ i t ab l e t o h o l d p et i ti o ner l i ab l e fo r t h e p o rt io n s o f t h e 2 0 1 0 d efi ci en cy an dth e
accu racy -rel at edp en al ty

at tri b ut ab l e t o th e o m i tt edem b ezzl em en ti n co m e. Th erefo re p et i t i on er i s en t i tl edt o rel i ef fro m jo i n tan ds ev eral l iab i l i ty u n d er
s ect i on 6 0 1 5 (b ) fo r 2 01 0
. II. Rel i ef Un d er Sect io n 6 0 1 5 (f) Th e Co u rtm

u s tn o wd et erm i n e wh et h er p et i t i o n er i s en t i t l ed t o rel i ef u n d er
s ect i on 6 0 1 5 (f) fo r 2 0 1 1
. 1 0 Sect i o n 6 0 1 5(f) p ro v i des th ata req u es t i n g s p o u s e m ay

1 0 Becau s e t h e Co u rtfi nd s th atp et i t i o n er h adactu al kno wl ed g e o f t h e em bezzl em en ti n co m e o m i tt edfro m th e 2 0 1 1 ret urn , p et i t io n er i s el i g i b le fo r rel i ef o n l y u n d er s ec. 6 0 1 5 (f). Sec. 6 0 1 5 (c)(3 )(C) p ro v id es th atrel i ef i s u n av ai l ab l e u n d er s ec. 6 0 1 5 (c) fo r an y p o rt i o n o f a d efi ci en cy

th e Secret ary

d em o n s trat es th e req u es t i ng s p o u s e h adactu al kn o wl ed g e o f atth e t i m e h e o r s h e s i g n edth e retu rn . Becau s e th e Co u rth as fo u n d th atp et it i on er h adactu al kn o w l ed g e o f (co n ti n u ed ...)- 3 0 -

[* 3 0 ] b e g ran t edrel i ef i f, u n d er p ro cedures p res cri b edb y th e Secret ary , t ak i n g i n t o
acco u n t al l th e fact an d ci rcu m s t an ces , i ti s i n equ i t ab l e t o h ol dth e req u es t i n g
s p o u se l i ab l e fo r the d efi ci en cy o r a p o rt i on th ereo f. Th e fact o rs th e IRS co n s i d ers rel ev an t wh en m ak i n g t h i s d et erm i n at i on were ex p lai n edab o v e an dare n o t rep eat edh ere. 1 1 Ag ai n , th e Co u rtm ay co n s u l tth es e fact o rs wh en rev i ewi n g th e Co m m i s s i o n er’ s d en i al o f rel i ef o n equ i t ab l e g ro u n d s b u ti s n otb o u n dt o fo l l o w th em . Th e Co u rt ’ s d et erm i nat i o n u l t im at el y turn s o n an ev al u at io n o f al l th e fact s
an d ci rcu m s t an ces . See Pu l l i n s v . Co m m i s s i o n er, 1 3 6 T.C. at 4 3 8 -4 39 ; Po rt er v . Co m m i s s i o n er, 1 3 2 T.C. 2 0 3 , 2 1 0 (2 0 0 9). As s t at ed s up ra p . 2 9 , fo r 2 0 1 0 al l o f t he fact o rs ei th er fav o r p et i t i o n er o r are
n eu tral . Fo r 2 0 1 1 th e an al y s i s o f each fact o r p ro duces th e s am e res u l tex cep tfo r th e kn owl ed ge fact or. Pet i t i o n er b ecam e aware o f M s . Lem m en s’ em b ezzl em en t
s ch em e i n J u n e 2 0 1 1 atth e t i m e o f h er arres t . He b ecam e aware o f th e t o t al

1 0 (...co n t i nu ed ) em bezzl em en ti n co m e o m i tt edfro m th e 2 0 1 1 ret urn , rel i ef u n d er s ec. 6 0 1 5 (c) i s u n av ai l ab l e. Fu rt her, b ecau s e t h e Co u rth as d et erm i n edp et it i o n er i s n o ten t i t l edt o rel i ef u n der s ec. 6 0 1 5(b ) an d(c), i t m ay d et erm i n e wh et h er p et it i o n er i s en t i t l edt o rel i ef u n der s ec. 6 0 1 5(f). See s ec. 6 0 1 5(f)(2 ).

1 1 In m ak i n g i t s d et erm i n at i o n , th e IRS co n s i d ers th ree fact o rs th at , i f m et , wi l l res u l ti n a s tream l i n ed d et erm i n at i o n g ran t in g rel i ef. See Rev . Pro c. 2 0 1 3 -3 4 , s ec. 4 .0 2 , 2 0 1 3 -4 3 I.R.B. 3 97 , 4 0 0 . Ital s o co n s i d eredth es e s am e fact ors wh en d et erm i n i n g wh eth er eq ui t ab l e rel i ef i s ap p ro p ri at e u n d er Rev . Pro c. 2 0 1 3 -3 4 , s ec. 4 .0 3, 2 0 1 3 -4 3 I.R.B. at4 0 0 , s o th ey are n o tad dres s eds ep arat el y .- 3 1 -

[* 3 1 ] am o un to f em

b ezzl em en ti n co m e i n J an u ary 2 0 1 2 wh en M s . Lem

m en s was
s en t en cedan do rd ered t o p ay res t itu ti o n o f o ver $ 50 0 ,0 0 0. Pet i t io n er h adactu al kn o wl ed g e o f t h e u n d ers t at em en to f em b ezzl em en t i n co m e wh en th e 2 0 1 1 retu rn
was fi l edi n Ap ri l 2 0 1 2
. Ad d i t i o n al ly , wh i l e fo r p rev i o u s y ears M s . Lem m o n s h ad p ro v id edth e co up l e’ s t ax i n fo rm at i o n t o th e p ai d p rep arer, p et i t i o ner p ro v i d edh i s
an d M s . Lem

m en s’ t ax i n fo rm at i o n t o th e p ai dp rep arer t o p rep are t h e 2 0 1 1 retu rn . He ch o s e n o tt o i n fo rm

th e p ai dp rep arer o f t h e em b ezzl em en ti n co m e fo r 2 0 1 1
. Al th ou g h the o ther fact o rs fo r eq u i t ab l e rel i ef ei th er fav o r p et it io n er o r are
n eu tral , p et i t i o n er’ s kn o wl ed g e o f t he em b ezzl em en ti n co m e an dh i s i n vo l vem en t i n p rep ari n g th e 2 01 1 retu rn wei g h t o o h eav i l y ag ai n s th im t o al l o w rel i ef. Aft er
co n si d eri n g al l o f t h e fact s an dci rcu m s t an ces , th e Co u rtfi n d s th atp et i ti o n er i s n o t
en t i t l edt o rel i ef fro m

jo i n t an ds ev eral l i ab i l i ty u n der s ect i o n 6 0 1 5 (f) fo r 2 0 1 1
. III. Co n cl u si o n Th e Co u rtfi n d s th atp et i t i o n er i s en ti t ledt o rel i ef fro m jo i n tan ds ev eral l i ab i l i ty un d er s ect i on 6 01 5 (b ) fo r t h e am o u nto f t h e l i ab i l i ty at tri b u tab l e t o th e
em bezzl em en ti n co m e fo r 2 0 1 0. Th e Co u rtal s o fi nd s th atp et i t i on er i s n o ten t i tl ed t o rel ief fo r 2 0 1 1
.- 3 2 -

[* 3 2 ] Th e Co u rth as co n s i d eredal l th e o th er arg u m en t s o f t h e p art i es , an dt o th e
ex t en tn o td i s cu ss edab o v e, fi n d s th o s e arg u m en t s t o b e i rrel ev an t , m o o t , o r wi th o u tm eri t . To refl ectthe fo reg o i n g , Anap p ro p ri at e d eci s i o n wi l l b e en t ered
.