T.C. Summary Opinion 2007-111

UNITED STATES TAX COURT

CHRISTINE ANN ELLIOTT, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 676-06S. Filed July 2, 2007.

Christine Ann Elliott, pro se.

Catherine G. Chang, for respondent.

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

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

This case involves petitioner’s election to seek relief from

joint and several liability for Federal income tax for the tax

year 2001. The issue for decision is whether petitioner is

entitled to relief under section 6015(b), (c), or (f). 

Background

Some of the facts have been stipulated and are so found. 

The stipulation of facts and the attached exhibits are

incorporated herein by this reference. At the time of the filing

of the petition, petitioner resided in Kentfield, California. 

Petitioner has a history of temporal lobe epilepsy and is

borderline learning disabled in arithmetic. When petitioner was

17 years old, she underwent involuntary electric shock treatment

after her parents admitted her to a hospital. Petitioner alleges

that the electric shock treatment left her with dyslexia, shortterm and long-term memory loss, cognitive deficiencies, and

seizure disorders for which she has had to compensate for the

past 34 years. 

Petitioner married Kirk Elliott in 1999. During tax year

2001, petitioner held an individual retirement account (IRA) in

her own name with the Resources Trust Company. Petitioner had

been married previously, and her first husband established the

account for her pursuant to their divorce settlement. During tax
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1 There is no indication in the record whether a Notice of

Deficiency was issued, but petitioner does not contest the amount

of tax due or that it was properly assessed.

year 2001, petitioner and Mr. Elliott agreed that petitioner

would request an early IRA distribution. Mr. Elliott filled out

at least two forms requesting early distributions from

petitioner’s IRA. The forms indicated that petitioner elected to

not have Federal income tax withheld from the gross distribution

amount requested. Petitioner signed all of the forms requesting

early distributions from her IRA and during tax year 2001

received distributions totaling $25,249. Resources Trust Company

directly deposited the early IRA distributions into a bank

account jointly held by petitioner and Mr. Elliott. Petitioner

and Mr. Elliott filed a joint Federal income tax return for tax

year 2001 but did not report the early distributions from

petitioner’s IRA.1 Petitioner and Mr. Elliott filed for divorce

in May 2003, but at the time of trial, the divorce was not yet

final.

Although an Internal Revenue Service Form 8857, Request for

Innocent Spouse Relief, was not made a part of the record,

respondent does not deny that petitioner submitted a request for

relief. On October 21, 2005, respondent issued a Notice of

Determination denying petitioner’s request for relief under

section 6015(b), (c), and (f). On January 9, 2006, petitioner 
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2 Sec. 6015(e) vests the Court with jurisdiction to review

an election for relief from joint and several liability arising

from a stand-alone petition. Cases brought under sec. 6015(e)

have become known as “stand alone” cases because only the right

to spousal relief is in issue, independent of any deficiency

proceeding. See Corson v. Commissioner, 114 T.C. 354, 363

(2000); Fernandez v. Commissioner, 114 T.C. 324, 329 (2000). 

filed with this Court a stand-alone petition contesting

respondent’s determination.2

Discussion

Generally, married taxpayers may elect to file a joint

Federal income tax return. Sec. 6013(a). Each spouse filing a

joint return is jointly and severally liable for the accuracy of

the return and the entire tax due for that year. Sec.

6013(d)(3). A spouse who has filed a joint return may, however,

seek relief from joint and several liability by following

procedures established in section 6015. Sec. 6015(a). 

Under section 6015(a), a requesting spouse may seek relief

from liability under section 6015(b) or, if eligible, may

allocate liability according to the provisions under section 

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

(c), then an individual may seek equitable relief under section

6015(f). Section 6015(f) permits relief from joint and several

liability where “it is inequitable to hold the individual liable

for any unpaid tax or any deficiency (or any portion of either)”. 

Except as otherwise provided in section 6015, petitioner bears 
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the burden of proof. Rule 142(a); Alt v. Commissioner, 119 T.C.

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

1. Section 6015(b)

Section 6015(b) provides relief from joint and several

liability for tax (including interest, penalties, and other

amounts) to the extent that such liability is attributable to an

understatement of tax. To be eligible for relief, the requesting

spouse must satisfy the following five elements of section

6015(b)(1):

(A) a joint return has been made for a taxable

year;

(B) on such return there is an understatement of

tax attributable to erroneous items of 1 individual

filing the joint return;

(C) the other individual filing the joint return

establishes that in signing the return he or she did

not know, and had no reason to know, that there was

such understatement;

(D) taking into account all the facts and

circumstances, it is inequitable to hold the other

individual liable for the deficiency in tax for such

taxable year attributable to such understatement; and,

(E) the other individual [timely] elects (in such

form as the Secretary may prescribe) the benefits of

this subsection * * *.

With respect to the last three elements, petitioner is not

the “other individual” described in section 6015(b)(1). The IRA

was petitioner’s separate account, to which Mr. Elliott had no

access without petitioner’s signature. Petitioner admitted that

she signed the early distribution forms, and that the money was
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transferred from her individual IRA to her joint account with Mr.

Elliott. She knew of the transactions and did not ask Mr.

Elliott whether the amounts were reported on their joint Federal

income tax return. Petitioner cannot be granted relief for

understatements that are attributable to her own erroneous items. 

See Hopkins v. Commissioner, 121 T.C. 73, 77 (2003). We agree

with respondent that petitioner is not entitled to relief under

section 6015(b). 

2. Section 6015(c)

Section 6015(c) allows a taxpayer who is eligible and so

elects to limit his or her liability to the portion of a

deficiency that is properly allocable to the taxpayer as provided

in section 6015(d). Sec. 6015(c)(1). Generally, this avenue of

relief allows a spouse to elect to be treated as if a separate

return had been filed. Rowe v. Commissioner, T.C. Memo. 2001-

325. To be eligible for relief under section 6015(c), the

requesting spouse must be no longer married to, be legally

separated from, or have lived at least 12 months apart from the

individual with whom the tax return was filed. Sec.

6015(c)(3)(A)(i). Relief under section 6015(c) is not available,

however, to a taxpayer if it is shown that the taxpayer had

actual knowledge when signing the return of any “item” giving

rise to a deficiency. Sec. 6015(c)(3)(C). In the case of

omitted income, knowledge of the item includes knowledge of
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receipt of the income. See Reser v. Commissioner, 112 F.3d 1258,

1265 (5th Cir. 1997), affg. in part and revg. in part T.C. Memo.

1995-572; sec. 1.6015-3(c)(2)(i)(A), Income Tax Regs. 

Petitioner and Mr. Elliott separated in 2003, and they had

lived apart for over 12 months at the time of the filing of the

petition. However, as noted above, the items giving rise to the

deficiency on the joint return are the unreported early

distributions from petitioner’s separate IRA. Petitioner allowed

Mr. Elliott to fill out the early distribution forms, petitioner

signed her name to the forms, and the distribution was deposited

into petitioner and Mr. Elliott’s joint bank account. Petitioner

admitted that she knew about the IRA withdrawals, and that she

discussed it with Mr. Elliott before they withdrew the amounts. 

Petitioner argues that her cognitive deficiencies and

learning disabilities prevent her from understanding forms and

numbers, so she had to rely on others, including Mr. Elliott, to

prepare her tax returns and handle her finances. Petitioner

testified that Mr. Elliott filled out financial forms, and she

signed them, trusting that her husband was doing what was in her

best interest since she could not comprehend the forms. Even

though petitioner could not comprehend forms, she testified that

she asked Mr. Elliott questions to determine whether the amounts

on the return were correct. She admitted, however, that she did

not ask him whether the IRA distributions were reported on the
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return. The Court is sympathetic to petitioner’s situation, but

a spouse requesting relief under section 6015 has a duty of

inquiry. Butler v. Commissioner, 114 T.C. 276, 284 (2000). 

Based on the foregoing, petitioner had actual knowledge of the

distribution from her IRA, see sec. 1.6015-3(c)(2)(i)(A), Income

Tax Regs., and this precludes the Court from granting her relief

under section 6015(c).

3. Section 6015(f)

Since petitioner is not entitled to relief under section

6015(b) or (c), we consider whether petitioner qualifies for

relief under section 6015(f). Section 6015(f)(1) provides that a

taxpayer may be relieved from joint and several liability if it

is determined, after considering all the facts and circumstances,

that it is inequitable to hold the taxpayer liable for the unpaid

tax or deficiency. This Court reviews the Commissioner’s denial

of relief pursuant to section 6015(f) under an abuse of

discretion standard. Fernandez v. Commissioner, 114 T.C. 324,

331 (2000); Butler v. Commissioner, supra at 287-292. Petitioner

bears the burden of proving that respondent’s denial of equitable

relief under section 6015(f) was an abuse of discretion. See

Rule 142(a); Alt v. Commissioner, supra at 311. Petitioner must

demonstrate that respondent exercised his discretion arbitrarily,

capriciously, or without sound basis in fact. Jonson v. 
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Commissioner, 118 T.C. 106, 125 (2002), affd. 353 F.3d 1181 (10th

Cir. 2003). 

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

prescribed guidelines for determining whether a spouse qualifies

for relief under subsection (f). The applicable provisions are

found in Rev. Proc. 2003-61, 2003-2 C.B. 296, modifying Rev.

Proc. 2000-15, 2000-1 C.B. 447. According to Rev. Proc. 2003-61, 

sec. 4.01, 2003-2 C.B. at 297 of the guideline, the requesting

spouse must satisfy seven conditions (threshold conditions)

before the Commissioner will consider a request for relief under

section 6015(f). The threshold conditions of this section are

stated in the conjunctive, and each condition must be satisfied

to be eligible to submit a request for equitable relief under

section 6015(f). Id. 

Under Rev. Proc. 2003-61, sec. 4.01(7), the income tax

liability from which the requesting spouse seeks relief must be

attributable to an item of the individual with whom the

requesting spouse filed the joint return, unless one of four

stated exceptions applies. The only exception relevant to

petitioner’s case applies if the requesting spouse establishes

that he or she was the victim of abuse prior to the time the

return was signed, and that fear of retaliation prevented the

requesting spouse from challenging the treatment of items on the

return. Rev. Proc. 2003-61, sec. 4.01(7)(d), 2003-2 C.B. at 298. 
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Petitioner alleges that Mr. Elliott was abusive, but the abuse

she reported was toward her daughter, and she was not aware of

the abuse until 2 years after the return at issue was signed. 

Since the reported abuse does not meet the requirements of this

exception, and the disbursement from petitioner’s IRA is

attributable to her, we agree with respondent that petitioner has

not met the threshold requirements for relief found in Rev. Proc.

2003-61, sec. 4.01 of the applicable guidelines. Since

petitioner has not met the threshold requirements, we find that

respondent did not act arbitrarily, capriciously, or without

sound basis in fact, and therefore conclude that petitioner does

not qualify for relief under section 6015(f). 

To reflect the foregoing,

Decision will be entered

for respondent.