T.C. Mem o. 2 01 6- 14 1
UNITED STAT ES TAX COURT
PAMELA HARDIN, Pet it io ne r, AND ROBERT H. LA TTINVILLE, Int erv en orv.

COMM ISSI ONER OF INTERNAL REVENUE, Resp on de nt

Doc ke t No . 64 8- 14
. Fi le d J ul y 26 , 20 16
. Harry Charl es , for

pe ti ti on er. Ben W . Hob ertan d J on A. Sant an ge lo , forin te rv en or . Karen O. Myric k, fo r res po nd en t.

MEMORANDUM FINDINGS OF FACT AND OPINION CHIECHI, J ud ge : Re sp on de ntde te rm in edth e fo ll owi ng de fic ie nc ie s i n, an d a ccuracy-rela te d p en al ti es un de r se ct io n 6 66 2( a) on , pet it io ne r’s Fed eral 1 in co m e ta x (t ax ):
All sec ti on refe ren ces are t o t he Int ern al Rev enue Co de ineffe ctat a ll 1 rel ev an t t im es . All R

ul e ref eren ces are t o t he Tax C ou rt Rul es of P ract ic e an d Pro cedur e.- 2 -

[* 2]

Year Defi ci en cy Accu racy-Rel at ed Pen al ty Und er Sec. 6 66 2( a) 20 09 $7 5,5 14 .48 $1 4,8 13 .24 20 10 11 1,0 61 .31 22 ,44 8.0 0 The is su es rem ai ni ng forde ci si on are wh ethe r pe ti ti on er i s en ti tl edto rel ie f
un de r se ct io n 6 01 5( f) an d wh ethe r th e Co urt s ho ul d i m po se a pe na lt y

onpe ti ti on er un de r se ct io n 6 67 3( a)(1 ) an d s an ct io n h er at to rn ey of r eco rdun de r se ct io n 66 73 (a)( 2) . The Co urt h ol ds th atpe ti ti on er i s n oten ti tl edto rel ie f un de r se ct io n 60 15 (f). The Co urt fu rth er h ol ds th atitwil l n otat t hi s t im e im po se a pe na lt y

on pe ti ti on er u nd er s ect io n 6 67 3( a)(1 ) orsan ct io n h er at to rn ey of r eco rdun de r se ct io n 6 67 3( a)(2 ). FINDINGS OF FACT So m e o f th e fac ts ha ve be enst ip ul at edan d a re s o fo un d. Pam el a Hard in (pe ti ti on er) re si de d i n M is so ur i atth e ti m e sh e fi le d t he pe ti ti on . At t im es no t es tabl is he d b y th e rec or d, p et it io ne r was award edanun de rgr adua te de gr ee i n fi nanc e an d i nt ern at io na l m an ag em en t an d am as te r’s de gr ee i n bu si ne ss adm in is tra ti on . At al l re le va ntti m es , in cl ud in g dur in g 2 00 9 a nd20 10 ,- 3 -

[* 3] th e ta xabl e y ears at i ss ue , pet it io ne r was li cen se d a s a c ert ifi edfin an ci al pl an ne r. Fro m a ti m e n otest ab li sh edby the reco rdto Sep te m be r 20 03 , pet it io ne r worke d i n M is so ur i fo r Mo ne taGroup, a r eg is te redin ve st m en t ad vi so r. At a t im e no t es tabl is he d b y

th e rec or d b efo re 2 00 3, o ne of p et it io ne r’s cl ie nt s atMo ne ta Gro up refe rredhe r to Ro be rt Th om a (Mr . Tho m a), wh om sh e ret ai ne d a s h er t ax return p rep arer . Duri ng th e y ears inwhi ch pe ti ti on er re ta in edMr. Tho m a, th ey so m et im es refe rredcli en ts to on e an ot he r. Pet it io ne r m etRo be rt H. Lat ti nv il le (in te rv en or ) in 19 97 . In 2 00 2, s he be ga n t o d at e h im

ser io us ly. They m arri edon May 15, 2 00 4, an d wer e st il l
m arri eddu rin g 2 00 9 a nd20 10
. Dur in g 2 00 9 a nd20 10 , in te rv en or was apa rtn er i n t he law fi rm of S ti ns on Mo rri so n Hec ke r, LLP. Duri ng th os e y ears , he a ls o o wne d asp orts m an ag em en t bu si ne ss th athe op erat edas aso le pro pr ie to rs hi p. In te rv en ordi sc on ti nu edhi s sp orts m an ag em en t b us in es s i n 2 01 4. Pet it io ne r ha s t wo d au gh te rs fro m a pr ev io us m arri ag e who , exc ep t wh il e th ey were at te nd in g c ol le ge , res id edwith h er an d i nt erv en ordu rin g 2 00 9 a nd 20 10 . Duri ng th os e y ears , pet it io ne r rece iv edfro m he r fo rm er h us ba ndan d t he- 4 -

[* 4] fathe r of

th os e d au gh te rs m on th ly chi ldsupp ort o f $4 03 .25 forth em , who as of Jan ua ry 1, 2 00 9, wer e ag es 20 an d 1 8. Pet it io ne r an d i nt erv en orha ve on e d au gh te r fro m th ei r m arri ag e who was se ve n years o ldas o f Nov em be r 16 , 20 11 , andwho als o re si de d wi th th em du rin g 20 09 an d 2 01 0. At al l re le va ntti m es , pet it io ne r an d i nt erv en or ge ne ral ly m ai nt ai ne d
se pa rat e b an k a cco un ts . Duri ng 20 09 an d 2 01 0, p et it io ne r m ai nt ai ne d v ari ou s ba nkacco un ts , so m e o f whi ch were b us in es s b an k a cco un ts . Duri ng 20 09 an d 20 10 , pet it io ne r an d i nt erv en orm ai nt ai ne d ajoi ntacco un t i nt o wh ic h i nt erv en or de po si te d b etween$7 ,00 0 a nd$7 ,50 0 e ach m on th . Duri ng th os e y ears , he a ls o pa iddi rect ly certa in ho us eh ol d e xp en se s, i nc lu di ng ex pe ns es , as i nc urred , in
ren ov at in g t he res id en ce i n wh ic h t he y li ve d. So m et im e in 20 03 , pet it io ne r, who at the ti m e h ad20 y ears of e xp eri en ce i n th e in ve st m en t i ndus try, creat edan d b ecame pres id en t o f a fi na nc ia l p la nn in g co m pa ny kn own as F ou nd at io n Wealt h M an ag em en t, LLC (FWM). FWM i s a reg is te redin ve st m en t ad vi so r th atfil es rep orts with t he Secu rit ie s an d Ex ch an ge Co m m is si on an d t ha t p et it io ne r ha s b een op erat in g a s a s ol e p ro pr ie to rs hi p s in ce sh e cre at edit . Int erv en orwas n otin vo lv edinth e cre at io n o r th e o pe rat io n o f- 5 -

[* 5] FW M. Pet it io ne r ret ai ne d M r. Tho m a in fal l 2 00 3 t o e st ab li sh anacco un ti ng syste m forFW M. As p res id en t o f FWM, pet it io ne r was res po ns ib le forFW M’s p ro vi di ng co m pr eh en si ve pe rs on al fin an ci al pl an ni ng , whi chin cl ud edgi vi ng advi ce o n
m at te rs in vo lv in g c as hf

lo w, reti rem en t, t ax an d e st at e p la nn in g, an d i nv es tm en t
m an ag em en t. Bet ween20 05 an d 2 01 2, the av erag e v al ue of the ass et s t ha t p et iti on er m an ag edas p res id en t o f FWM in crea se d fr om $7 8 m il li on to $1 50 m il li on . In20 14 , th e av erag e v al ue of t he ass et s t ha t s he m an ag edas p res id en t o f FWM
was $2 32 .3 m il li on . As of Nov em be r 20 11 , pet it io ne r ha d a ve rag eda cl ie nt ret en ti on rat e th ro ug ho utth e p rev io us eig hty ears of 9 9 p erce nt . Dur in g t he pe rio d 2 00 9 t hr ou gh20 14 , pet it io ne r ret ai ne d S haun dr a Hue bn er (Ms . Hueb ne r) t o a ss is t h er i n o pe rat in g F W M. Ms . Hueb ne r as si st edpe ti ti on er i n va rio us way s, i nc lu di ng inm ai nt ai ni ng bo ok s an d re co rd s fo r FWM’ s b us in es s op erat io ns . Ms. Hu eb ne r al so ga th eredcert ai n p ers on al in fo rm at io n a ndin fo rm ati onrel at in g t o F W M fo r us e in th e p rep arat io n o f pe ti ti on er’s t ax return fo r, in te r al ia , eachof t he tax ab le y ears 20 09 an d 2 01 0. Ms . Hueb ne r ga ve th e in fo rm at io n th atsh e h adga th eredforus e in pre pa rin g e achof t ho se returns to Mr. Tho m a. Pet it io ne r m ai nt ai ne d s ev eral sep arat e b an k a cco un ts forFW M (FWM’s ba nkacco un ts ). Pet it io ne r was th e au th or iz edsi gn at ory ov er, an d re cei ve d t he- 6 -

[* 6] ba nkst at em en ts for , FW M’s b an k a cco un ts . Int erv en ordi d n otha ve si gn ato ry auth or it y ov er, an d d idno t re cei ve th e b an k s ta te m en ts for , FW M’s b an k
acco un ts . Nor d idhe rece iv e an y ot he r fi nanc ia l i nf

orm at io n re la ti ng to FW M. Pet it io ne r an d i nt erv en orfil edjoi nt ly Form s 1 04 0, U.S. In di vi du al Inc om e Tax Return (r eturn) , forth e ta xabl e y ears 20 09 (20 09 joi ntreturn) an d 2 01 0 (2 01 0 joi ntreturn) . (The C ou rt s ha ll so m et im es refe r co ll ect iv el y to th e 2 00 9 jo in t re tu rn an d t he 20 10 joi ntreturn a s t he joi ntreturns inqu es ti on .) Pet it io ne r an d i nt erv en orret ai ne d M r. Tho m a to pre pa re the joi ntreturns in qu es ti on . Whi le he was p rep ari ng eachof t ho se returns , Mr. Tho m a m eton on e oc cas io n wi th bo th pe ti ti on er an d i nt erv en oran d m eton othe r oc cas io ns sep arat el y with p et it io ne r an d wi th in te rv en or . Peti ti on er, o r Ms . Hueb ne r on he r be ha lf, p ro vi de d M r. Tho m a wit h i nf orm at io n re la ti ng to FWM fo r us e in hi s p rep arat io n o f Sch edul e C, Pro fitor Lo ss Fro m Bu si ne ss (Sch edul e C), fo r th atbu si ne ss foreach of th e ta xabl e y ears 20 09 (20 09 FW M Sch edul e C) an d 2 01 0 (2 01 0 F W M Sch ed
ul e C). In te rv en orpro vi de d M r. Tho m a wit h i nf orm at io n re la ti ng to hi s i nt eres t i n th e la w firm

inwhi ch he was apartn er fo r us e inhi s p rep arat io n o f Sch edul e C fo r th atpa rtn ers hi p i nt eres t fo r eac h o f th e ta xabl e y ears 20 09 (20 09 law fi rm Sch ed
ul e C) an d 2 01 0 (2 01 0 l aw fi rm Sch edul e C). In te rv en orals o g av e Mr. Th om a in fo rm at io n re la ti ng to in te rv en or ’s sp orts m an ag em en t b us in es s fo r us e in hi s- 7 -

[* 7] pre pa rat io n o f Sch edul e C fo r th atbu si ne ss for each of t he tax ab le y ears 20 09
an d 2 01 0. Befo re Mr . Tho m a h adeach of t he joi ntreturns inqu es ti onfil edele ctro nic al ly, he pro vi de d p et it io ne r wit h aco py of th e joi ntreturn tha t was to be fil ed
. 2 Pet it io ne r di d n otrev ie w th e co py of th e 2 00 9 jo in t re tu rnor t he co py of th e 2 01 0 joi ntreturn t ha t M r. Tho m a p ro vi de d t o h er. In st ead , aft er Mr . Tho m a p ro vi de d he r a co py of eac h o f th e joi ntreturns inqu es ti on , sh e imm ed ia te ly pla ceditina fil e in he r of

fic e. Each of p et it io ne r an d i nt erv en or au th or iz edMr. Tho m a to fil e el ect ro ni
cal ly each o f th e joi ntreturns inqu es ti on . Neithe r pe ti ti on er n or in te rv en or rev ie wedeach of t he joi ntreturns inqu es ti on be fo re ea ch of t he m was fi le d. Pet it io ne r an d i nt erv en orin cl ud edSch edul e A, Ite m iz edDedu ct io ns (Sch edul e A), with e ach of the ir 2 00 9 jo in t re tu rn(20 09 Sch edul e A) an d the ir 20 10 joi ntreturn (2 01 0 S ch edul e A). In t he 20 09 Sch edul e A an d the 20 10 Sch edul e A, th ey

cla im ed , in te r al ia , “ Hom e m ortg ag e in te res t an d p oi nt s” of $6 7,3 95 an d $ 41 ,96 6, re sp ect iv el y . Altho ug h t he reco rdest ab li sh es th atMr. Tho m a p ro vi de d p et it io ne r wit h a 2 co py of eac h o f th e 2 00 9 jo in t re tu rnan d t he 20 10 joi ntreturn t ha t was to be fil ed ei th er b y vi si ti ng he r of

fic e an d g iv in g h er a p ap er co py or b y em ai li ng a co py to he r, th e rec or d d oe s n otest ab li sh whi ch of t ho se two m etho ds Mr. Tho m as us edto do so .- 8 -

[* 8] Pet it io ne r an d i nt erv en orin cl ud edth e 2 00 9 F W M Sch edul e C wit h t he ir 20 09 joi ntreturn andth e 2 01 0 F W M Sch edul e C with the ir 2 01 0 jo in t re tu rn . In th ei r 20 09 FW M Sch edul e C, p et it io ne r an d i nt erv en orsh owe d “ Gro ss rece ip ts or sa le s” of $ 63 2,6 57 an d c la im ed , in te r al ia , “ Oth er ex pe ns es ” o f $3 30 ,49 5. Th os e

“ Oth er ex pe ns es ” in cl ud ed , in te r al ia , “ so ftwa re upg rad es ” o f $2 8,7 40 , “ em pl oyee he al th /fi tn es s” of $ 3,1 44 , “ co nt in ui ng ed& cert upg rad e” o f $2 4,2 40 , and“ sh ared
co m m is si on s” of $ 17 5,8 10 . In the ir 2 01 0 F W M Sch edul e C, p et it io ne r an d in te rv en orsh owe d “ Gro ss rece ip ts or s al es ” o f $7 25 ,69 3, an d c la im ed , in te r al ia , m ortg ag e in te res t o f $2 0,9 83 an d “ Oth er ex pe ns es ” o f $3 90 ,49 4. Th os e “ Oth er ex pe ns es ” in cl ud ed , in te r al ia , “ co nt in ui ng educ at io n” of $ 21 ,10 0 a nd“ sh ared fees /c o- op bro ke r” o f $2 60 ,16 9. Pet it io ne r an d i nt erv en orals o i nc lu de d t he 20 09 law fi rm Sch edul e C wit h th ei r 20 09 joi ntreturn a ndth e 2 01 0 l aw fi rm Sch edul e C wit h t he ir 2 01 0 jo in t re tu rn . In the 20 10 law fi rm Sch edul e C, th ey

cla im ed , in te r al ia , “ Oth er ex pe ns es ” of $5 1,7 86 . Tho se “ Oth er ex pe ns es ” in cl ud ed , in te r al ia , “ Pen Co nt r in cl ud edin K-1 in c” o f $3 2,5 00
. Aro un d J anua ry

10 , 20 11 , pet it io ne r an d i nt erv en or sep arat ed . On Nov em be r 16 , 20 11 , th ey

were d iv or cedpu rs ua ntto a jud gm en t o f di ss ol ut io n o f m arria ge (di vo rce ju dg m en t) t ha t the Cir cu itCo urt o f St . Lou is Co un ty, Mi ss ou ri,- 9 -

[* 9] en te red . The d iv or ce jud gm en t i nc or po rat eda m ari ta l s et tl em en t an d s ep arati onag reem en t b etweenpe ti ti on er an d i nt erv en or(se pa rat io n a gr eem en t), wh ic h pr ov id edth e fo ll owi ng with re sp ectto th e d iv is io n o f th e b us in es s i nt eres ts of pe ti ti on er an d i nt erv en or : 4.8 Bu si ne ss /P artne rs hi p In te res ts : a. Hus ba ndown s a p artne rs hi p i nt eres t [i n] Sti ns on Mo rri so n Heck er, LLP. Hus ba ndsh al l b e award edall of h is rig ht , ti tl e an d in te res t i n a ndto Sti ns onMo rri so n Hec ke r, LLP, in cl ud in g Hus ba nd ’s cap it al acco un t. b. Wife o wns a m em

be rs hi p i nt eres t i n F ou nd at io n Wealt h Man ag em en t, LLC. W ife sh al l b e award edall of h er ri gh t, t it le an d in te res t i n a ndto Fo un da ti on W eal th Man ag em en t, LLC, in cl ud in g a ll as se ts an d l iabi li ti es th ereo f, an d s pe ci fic al ly inc lu di ng th e Pri va te Ban k l oa n o n wh ic h F ou nd at io n Wealt h M an ag em en t i s t he ob li go r. c. Each pa rty sh al l warran t an d d efen d, an d i nd em ni fy an d h ol d th e o th er h arm le ss fro m

an y an d a ll ob li ga ti on s, fi na nc ia l l iabi li ty, in de bt edne ss , cla im s o r ch arg es ass oc ia te d wi th hi s o r he r award ed own ers hi p o r in te res t i n t he afo rem en ti on eden ti ti es , in cl ud in g t he co stof areas on ab le de fen se (atto rn ey ’s fees , li ti ga ti onex pe ns es an d co urt co st s) ari si ng th eref ro m . Aro un d S ep te m

be r 20 11 , res po nd en t i ni ti at edanex am in at io n o f th e joi nt returns inqu es ti on . Mr. Tho m a rep res en te d p et it io ne r an d i nt erv en ordu rin g t ha t
ex am in at io n. On Au gu st29 , 20 12 , res po nd en t s en t t o M r. Tho m a Fo rm 45 49 , Inc om e Tax Exa m in at io n C ha ng es (Fo rm 45 49 ), inwhi ch res po nd en t p ro po se d c ert ai n d et er-- 10 -

[* 10 ] m in at io ns with re sp ectto th e joi ntreturns inqu es ti on (20 09 an d 2 01 0 F orm 45 49 ). Res po nd en t i nc lu de d wi th th e 2 00 9 a nd20 10 Fo rm 45 49 a workp ap er ex pl ai ni ng th os e p ro po se d d et erm in at io ns . (The C ou rt s ha ll refe r co ll ect iv el y to th e 2 00 9 a nd20 10 Fo rm

45 49 an d t he workpape r in cl ud edwith t ha t fo rm as res po nd en t’s p ro po se d d et erm in at io ns ). Inres po nd en t’s p ro po se d d et erm in at io ns , res po nd en t p ro po se d t o d is al lo w, in te r al ia , th e res pe ct iv e ex pe ns es for“ sh aredco m m is si on s” an d “ sh aredfees /c oop bro ke r” tha t p et it io ne r an d i nt erv en orha d c la im edas p artof “ Oth er ex pe ns es ” in th e 2 00 9 F W M Sch edul e C an d t he 20 10 FWM Sch edul e C, res pe ct iv el y . In
res po nd en t’s d et erm in at io ns , res po nd en t al so pro po se d t o d is al lo w, in te r al ia , “ Pen Co nt r in cl ud edinK-1 i nc ” o f $3 2,5 00 th atpe ti ti on er an d i nt erv en orha d c la im ed
as pa rt o f “ Oth er ex pe ns es ” in th e 2 01 0 l aw fi rm Sch edul e C. On Au gu st31 , 20 12 , Mr. Tho m a se nta co py of res po nd en t’s p ro po se d d et erm in at io ns to each of pe ti ti on er an d i nt erv en or . On Se pt em

be r 12 , 20 12 , in te rv en orsubm it te d t o re sp on de ntco m pl et ed Fo rm 88 57 , Reque stforInn oc en t Sp ou se Rel ie f (Fo rm 88 57 ), with re sp ectto th e ta xabl e y ears 20 09 an d 2 01 0 (i nt erv en or ’s Form 88 57 ). In t ha t fo rm , in te rv en or in di cat edth athe di d n otkn ow t ha t the re was an yth in g i nc orrector m is si ng inth e joi ntreturns inqu es ti on . He th enst at edinpe rti ne ntpa rt i n i nt erv en or ’s Form- 11 -

[* 11 ] 88 57 : “ I di d n otha ve an y kn owl ed ge reg ard in g t he fin an ci al st atus of my wife ’s [pe ti ti on er’s] bu si ne ss [FWM] , exc ep t tha t s he see m edsu cces sf ul init .” On Oct ob er 2 4, 2 01 2, p et it io ne r subm it te d t o re sp on de ntco m pl et edFo rm 88 57 with re sp ectto th e ta xabl e y ears 20 09 an d 2 01 0 (p et it io ne r’s Fo rm 88 57 ). In
a co ve r le tt er at ta ch edto pe ti ti on er’s Fo rm 88 57 , pet it io ne r st at edinpe rti ne ntpa rt: Att ach edpl eas e fi ndm

y Fo rm 88 57 an d a tt ach m en ts . In s ho rt, I a m ev ery bi t as “ in no cen t” as my ex -h us ba ndinth atwe bo th rel ie d o n the ex pe rti se of o ur

tax pre parer. Ou r returns were n otco m pl et edun ti l th e la stm in ut e. W e trus te d t ha t the y were p rep aredaccu rat el y . W e pa idth e ta x a s d et erm in edon th os e returns . Our joi nt , m arri edho us eho ldin20 09 an d 2 01 0 b en efi tt edfro m th e te m po rary, erron eo us tax rel ie f. Inpe ti ti on er’s Fo rm

88 57 , sh e d idno t ch eck“ y es ” o r “ no ” in res po ns e to a qu es ti on ask in g wh ethe r sh e was th e v ic ti m of s po us al ab us e o r do m es ti c v io le nc e du rin g 2 00 9 o r 20 10 . In tha t fo rm , sh e in di cat edth atsh e d idno t kno w th atth ere was anyth in g i nc orrectinth e joi ntreturns inqu es ti on be cau se sh e rel ie d o n M r. Tho m a’s ex pe rti se . In p et it io ne r’s Fo rm 88 57 , pet it io ne r st at edinpe rti ne ntpa rt:

“ It wo ul d b e u nf

ai r to ho ldm e so le ly (or i n t he m ajor it y ) li ab le forth e ta x. My exhu sb an d a ndI are e qu al ly inn oc en t i n re lying on ou r ta x p rep arer .” Inanad de ndu m to pe ti ti on er’s Fo rm

88 57 , pet it io ne r st at edinpe rti ne ntpa rt: InFeb ru ary orMarc h o f eac h year, Bo b Lat ti nv il le [in te rv en or ] an d I wou ldm eetwith M r. Tho m a athi s o ffi ce i n C ol um bi a, IL. W e wou ld dr op off an y tax do cu m en ts we ha d re cei ve d. My ex-h us ba nddi d n ot- 12 -

[* 12 ] typic al ly hav e h is K-1 fr om hi s l aw fi rm

un ti l af te r th os e m eet in gs . The K-1 us ua ll y

arri ve d v ery cl os e to Apri l 1 5. Th e ta x p repa rer wo ul d t he n p rep are o urjoi ntreturn. Mr . Tho m a wou ldsen d u s th e e-f il in g fo rm

forsi gn atur e an d c oupo ns foram ou nt s o wedas we ll as qu art erl y

est im at es for

th e co m in g year. My

ex -h us ba ndan d I d id no t re vi ew th e returns ; we s im pl y rel ie d o n o urpre pa rer, as su m edhe ha d p rep aredth e returns accu rat el y an d s en t i n o urm on ey . On Oct ob er 2 6, 2 01 2, p et it io ne r subm it te d t o re sp on de ntco m pl et edFo rm 12 50 8, Qu es ti on na ire forNon -Reque st in g S po us e (Fo rm 12 50 8) . In p et it io ne r’s Fo rm 12 50 8, p et it io ne r st at edth atsh e an d i nt erv en or“ each ha d s ep arat e acc ou nt s us edfor ou r se pa rat e b us in es se s.” In anad de ndum to pe ti ti on er’s Fo rm

12 50 8, pe ti ti on er s ta te d i n p ert in en t p art : 9. Th e ch an ge d i te m s p rimaril y rel at e to Ms . Hard in ’s [pe ti ti on er’s] bu si ne ss . As ex pl ai ne d h erei n, M r. Tho m a ei th er n eg li ge nt ly or frau du le nt ly too k s ub st an ti al de du ct io ns forfees in20 09 an d fe es sh are wi th co op bro ke r in 20 10 . Ms. Har di n d oe s n otkn ow wh ethe r Mr. Lat ti nv il le [in te rv en or ] rev ie wedth e returns at i ss ue be fo re si gn in g t he m , bu t d oe s n otbe li ev e th ateit he r sh e o r Mr. Lat ti nv il le actua ll y rece iv edth e returns un ti l af te r th ey were fi le d. * * * On No ve m

be r 13 , 20 12 , in te rv en orsubm it te d t o re sp on de ntco m pl et ed Fo rm 12 50 8. In in te rv en or ’s Form 12 50 8, i nt erv en orst at edinpe rti ne ntpa rt: My ex -wif

e (the “ In di vi du al ”) [p et it io ne r] andI each m ai nt ai ne d o ur own tax reco rd s. Th ro ug ho utth e y ear the Ind iv idua l wo ul d m eetwith ou r ta x p rep arer , Mr. Tho m a. Then , inor abo utFeb ru ary of th e y ear fo ll owi ng th e ta x year fo r whi ch returns were b ei ng pre pa red , th e In di vi du al an d I wo ul d m eetwith M r. Tho m a an d d el iv er d oc um en ta ti onfor th e p rep arat io n o f y ou r [s ic ] ta x re tu rn s. At t ha t m eet in g, th ere wer e typi cal ly a few do cu m en ts th atwe ha d n otrece iv edth at- 13 -

[* 13 ] were n eces sa ry

to co m pl et e o urreturns . After we rece iv ed th os e d oc um en ts inlat e Feb ru ary an d e arl y Marc h we wo ul d s ch edul e an ot he r m eet in g wi th Mr. Tho m a an d d el ve r [s ic ] th e rem ai ni ng do cu m en ts . Then , Mr. Tho m a wou ldpre pa re o urtax es an d s en d t he returns an d a n e le ctro ni c fi li ng do cum en t fo r ou r si gn atur e. I rev ie wedth e ta x re turn s t o c on firm th e acc ur acy of th e d oc um en ts I pr ov id edMr. Tho m a an d the tax ab le in co m e attri bu tabl e to m y pa rtn ers hi p i nt eres t. I d idno t re vi ew an y un de rlyin g d oc um en t o r it em pe rta in in g t o t he Ind iv idua l’s b us in es s an d i ts tax ab le in co m e. At a t im e n otest ab li sh edby the reco rd , res po nd en t m ad e anin it ia l d et erm ina ti on (in it ia l s ect io n 6 01 5( c) d et erm in at io n) th ateach of p et it io ne r an d i nt erv en or is en ti tl edto rel ie f un de r se ct io n 6 01 5( c). Inth atin it ia l d et erm in at io n, re sp on de nt
co nc lu de d t ha t i nt erv en oris en ti tl edto rel ie f un de r se ct io n 6 01 5( c) wi th res pe ctto , in te r al ia , (1) th e p orti on of t he pro po se d d efi ci en cy forth e ta xabl e y ear 2 00 9 t ha t
was attrib ut ab le to th e d is al lo wan ce o f th e ex pe ns es for “ sh aredco m

m is si on s” cl ai m edinth e 2 00 9 F W M Sch edul e C an d (2 ) th e p orti onof t he pro po se d d efi
ci en cy forth e ta xabl e y ear 2 01 0 t ha t was att rib ut ab le to th e d is al lo wan ce o f th e ex pe ns es for“ sh aredfees /c o- op bro ke r” cl ai m edinth e 2 01 0 F W M Sch edul e C. Inth e in it ia l s ect io n 6 01 5( c) d et erm in at io n, re sp on de ntfurth er co nc lu de d t ha t pe ti ti on er i s en ti tl edto rel ie f un de r se ct io n 6 01 5( c) wi thres pe ctto th e p orti on of th e d efi ci en cy

forth e ta xabl e y ear 2 01 0 t ha t was attrib ut ab le to th e d is al lo wan ce- 14 -

[* 14 ] of t he ex pe ns es for“ Pen Co nt r in cl ud edinK-1 i nc ” cl ai m edinth e 2 01 0 l aw firm Sch edul e C. On J anua ry

29 , 20 13 , pet it io ne r’s rep res en ta ti ve , who is als o t he att orne y of
reco rdinth is cas e, se ntto res po nd en t a l et te r (p et it io ne r’s ap pe al ) in whi ch sh e ap pe al edth e in it ia l d et erm in at io n t ha t i nt erv en oris en ti tl edto rel ie f un de r se ct io n 60 15 (c). At ati m e n otest ab li sh edby the reco rd , res po nd en t as si gn edpe ti ti on er’s ap pe al to anApp eal s o ffi cer i n re sp on de nt ’s App eal s Off ic e. On M ay 7, 2 01 3, p et it io ne r’s rep res en ta ti ve sen t t o the App eal s o ffi cer a le tt er i n s up po rt o f he r ap pe al . In tha t l et te r, pe ti ti on er’s rep res en ta ti ve arg ue d t ha t in te rv en orsh ou ldhave be ende ni edrel ie f un de r se ct io n 6 01 5( c) b ecau se he ha d actua l kno wled ge th atth e ex pe ns es for“ sh aredco m m is si on s” an d “ sh aredfees /c oop bro ke r” i n t he res pe ct iv e 2 00 9 F W M Sch edul e C an d t he 20 10 FW M Sch edul e C were e rro ne ou s. On J un e 1 9, 2 01 3, i nt erv en orsen t t o the App eal s o ffi cer alet te r in whi ch he op po se d p et it io ne r’s ap pe al . In tha t l et te r, in te rv en orarg ue d t ha t re sp on de ntha d pr op erl y gra nt edin te rv en or

rel ie f un de r se ct io n 6 01 5( c) b ecau se in te rv en orwas no t i nv ol ve d i n t he op erat io n o f FWM andha d n o a ctua l kno wled ge of a ny erro ne ou s ex pe ns es th atth atorg an iz at io n h adcla im edinth e 2 00 9 F W M Sch edul e C an d t he 20 10 FWM Sch edul e C, res pe ct iv el y .- 15 -

[* 15 ] At a t im e n otest ab li sh edby the reco rd , th e App eal s o ffi cer a ffi rm edth e in it ia l s ect io n 6 01 5( c) d et erm in at io n t ha t ea chof p et it io ne r an d i nt erv en oris
en ti tl edto cert ai n re li ef u nd er s ect io n 6 01 5( c). On No ve m

be r 19 , 20 13 , res po nd en t i ss ue d t o p et it io ne r a n ot ic e o f de fici en cy forth e ta xabl e y ears 20 09 an d 2 01 0 (n ot ic e). Inth e n ot ic e, res po nd en t de te rm in ed , in te r al ia , to (1) de crea se by $9,6 10 th e “ Hom e m ortg ag e in te res t an d po in ts ” cl ai m edinth e 2 00 9 S ch edul e A, (2) de crea se by $10 ,40 7.2 3 t he “ Gro ss rece ip ts or s al es ” sh owe d i n t he 20 09 FW M Sch edul e C, an d (3 ) di sa ll ow t he fol
lo win g “ Oth er ex pe ns es ” cl ai m edinth e 2 00 9 F W M Sch edul e C: “ so ftwa re upgr ad es ” o f $1 6,2 15 , “ em

pl oyee he al th /fi tn es s” of $ 3,1 44 , “ co nt in ui ng ed& cert up gr ad e” o f $2 4,2 40 , and“ sh aredco m m is si on s” of $ 17 5,8 10 . In the no ti ce, res po nd en t fu rth er d et erm in ed , in te r al ia , to (1) in crea se by $7,7 36 th e “ ho m e
m ortg ag e in te res t an d p oi nt s” cla im edinth e 2 01 0 S ch edul e A, (2) di sa ll ow “ Pen Co nt r in cl ud edinK-1 i nc ” o f $3 2,5 00 cla im edas a n “ Oth er ex pe ns es ” in th e 2 01 0 la w firm Sch edul e C, (3 ) in crea se by $17 ,95 3.3 5 t he “ Gro ss rece ip ts or s al es ” sh owe d i n t he 20 10 FW M Sch edul e C, (4 ) di sa ll ow m ortg ag e in te res t o f $2 0,9 83 cl ai m edinth e 2 01 0 F W M Sch edul e C, an d (5 ) di sa ll ow t he fol lo win g “ Oth er ex pe ns es ” cl ai m edinth e 2 01 0 F W M Sch edul e C: “ co nt in ui ng educ at io n” of $2 1,1 00 an d “ sh aredfees /c o- op bro ke r” o f $2 60 ,16 9. In th e n ot ic e, res po nd en t- 16 -

[* 16 ] furth er d et erm in edth atpe ti ti on er i s l iabl e fo r th e ta xabl e y ears 20 09 an d 20 10 foranaccu racy-rela te d p en al ty und er s ect io n 6 66 2( a). Ina so -cal le d u nd ers ta te m en t al lo cat io n wo rk sh eetth atres po nd en t i nc lu de d with t he no ti ce (a ll oc at io n wo rk sh eet ), res po nd en t i nd ic at edth atin te rv en oris
en ti tl edto rel ie f un de r se ct io n 6 01 5( c) wi th res pe ctto (1) th e p orti on of t he de fic ie nc y

forth e ta xabl e y ear 2 00 9 t ha t was att rib ut ab le to res po nd en t’s p ro po se d de te rm in at io ns with re sp ectto th e 2 00 9 F W M Sch edul e C an d (2 ) th e p orti on of th e d efi ci en cy

forth e ta xabl e y ear 2 01 0 t ha t was attrib ut ab le to res po nd en t’s pr op os edde te rm in at io ns with re sp ectto th e 2 01 0 F W M Sch edul e C. Inth atwork
sh eet , res po nd en t fu rth er i nd ic at edth atpe ti ti on er i s en ti tl edto rel ie f un de r se ct io n 60 15 (c) wi th res pe ctto th e p orti on of t he de fic ie nc y forth e ta xabl e y ear 2 01 0 t ha t
was attrib ut ab le to res po nd en t’s p ro po se d d et erm in at io n wi th res pe ctto th e 2 01 0 la w firm Sch edul e C. 3 Inth e n ot ic e, res po nd en t s etforth th e fo ll owi ng with re sp ectto th e res pe cti ve cla im s u nd er s ect io n 6 01 5 t ha t p et it io ne r an d i nt erv en orha d m ad e: Mr. Lat ti nv il le [in te rv en or ] * * * re qu es te d In no cen t Sp ou se rel ie f un de r IRC 60 15 (b ), IRC 6 01 5( c) o r IRC 60 15 (f) fo r th e ta x years en di ng Decem

be r 31 , 20 09 an d Dec em

be r 31 , 20 10 . Reli ef h as be en
Res po nd en t m ad e n o d et erm in at io n i n t he no ti ce wi th res pe ctto th e 2 00 9 3 la w firm Sch edul e C.- 17 -

[* 17 ] gra nt ed . Mr. Latt in vi ll e is in di vi du al ly liab le for$1 1,8 72 .21 pl us in te res t. See att ach edall oc at io n wo rk sh eet . Ms . Hard in [pe ti ti on er] * * * re qu es te d In no cen t Sp ou se rel ie f un de r IRC 6 01 5( b) , IRC 6 01 5( c) o r IRC 60 15 (f) fo r th e ta x years e nd in g Decem be r 31 , 20 09 an d Dec em

be r 31 , 20 10 . Reli ef h as be engrant ed
. Ms . Hard in is in di vi du al ly liab le for$1 86 ,57 5.7 9 p lu s p en al ti es an d in te res t. See att ach edall oc at io n wo rk sh eet . On No ve m

be r 19 , 20 12 , du rin g re sp on de nt ’s exa m in at io n o f th e y ears at is su e, pe ti ti on er fi le d areturn fo r th e 2 01 1 t ax ab le y ear ( 20 11 return) . In Fo rm 45 49 da te d M ay

28 , 20 13 , res po nd en t p ro po se d c ert ai n d et erm in at io ns with
res pe ctto pe ti ti on er’s 2 01 1 re tu rn . Tho se pro po se d d et erm in at io ns in cl ud ed(1) an ad jus tm en t tha t i nc reas edpe ti ti on er’s t ax ab le in co m e fro m $1 33 ,24 6 t o $ 25 1,9 15
an d t ha t was en ti rel y

att rib ut ab le to de te rm in at io ns th atres po nd en t h adpro po se d rel at in g t o t he Sch edul e C fo r FWM th atpe ti ti on er h adin cl ud edwith h er 2 01 1 return and(2) anaccu racy-rela te d p en al ty und er s ect io n 6 66 2( a) o f $1 7,3 76 .20
. On J anua ry

13 , 20 14 , pet it io ne r fi le d ape ti ti on with t he Co urt i n wh ic h s he arg ue d t ha t re sp on de ntha d e rredingra nt in g i nt erv en orrel ie f un de r se ct io n 60 15 (c). On Au gu st4, 2 01 4, re sp on de ntfil eda m ot io n fo r su m m ary jud gm en t. In th atm ot io n, re sp on de ntask edth e Co urt t o h ol d tha t i t d oe s n otha ve juri sd ic ti on ov er thi s ca se . In tha t m ot io n, re sp on de ntin di cat edth atpe ti ti on er’s at to rn ey of- 18 -

[* 18 ] reco rdha d re pr es en te d t o c ou ns el forres po nd en t tha t p et it io ne r is no t di sp ut in g t he de te rm in at io ns inth e n ot ic e. In st ead , her on ly dis pu te is whet he r res po nd en t s ho ul d h av e g ran te d re li ef t o i nt erv en orun de r se ct io n 6 01 5( c). Res po nd en t ar gu es inres po nd en t’s m ot io n fo r su m m ary jud gm en t tha t the Co urt do es no t h av e juri sd ic ti on un de r se ct io n 6 01 5 t o re so lv e th e o nl y di sp ut e th at pe ti ti on er’s at to rn ey

of r eco rdrep res en te d re m ai ns inth is cas e. On Se pt em

be r 11 , 20 14 , th e Co urt h el d atel ep ho ni c co nf eren ce (S ep te m

be r 11 , 20 14 tel ep ho ni c co nf

eren ce) wi th pe ti ti on er’s co un se l, i nt erv en or ’s cou ns el , an d re sp on de nt ’s cou ns el . Duri ng th attel ep ho ni c co nf eren ce, the Co urt ad vi se d
res pe ct iv e co un se l fo r th e p art ie s t ha t i t d oe s n otha ve juri sd ic ti on to ad dr es s pe ti ti on er’s al le ga ti on inth e p et it io n tha t re sp on de nterre d i n g ran ti ng rel ie f to in te rv en orun de r se ct io n 6 01 5( c). The Co urt fu rth er i nf orm edres pe ct iv e co un se l fo r th e p art ie s dur in g t he Sep te m be r 11 , 20 14 tel ep ho ni c co nf eren ce tha t i t wo ul d de ny resp on de nt ’s m ot io n fo r su m m ary jud gm en t wi th ou t p reju di ce an d e nt ert ai n a
m ot io n b y

pe ti ti on er fo r le av e to fil e anam en dm en t t o p et it io n o r anam en de d pe ti ti on . By ord er d at edSep te m

be r 12 , 20 14 , th e Co urt d en ie d re sp on de nt ’s m ot io n fo r su m m ary jud gm en t wi th ou t p reju di ce.- 19 -

[* 19 ] On Se pt em

be r 22 , 20 14 , pet it io ne r fi le d am ot io n fo r le av e to fil e am en de d pe ti ti on an d l od ge d a n a m en de d p et it io n. OnOcto be r 15 , 20 14 , th e Co urt g ran te d th atm ot io n a ndha d p et it io ne r’s am en de d p et it io n fi le d a s o f th atda te . In tha t
am en de d p et it io n, p et it io ne r al le ge d t ha t s he is en ti tl edto rel ie f un de r se ct io n 60 15 (f) fo r eac h o f th e ta xabl e y ears 20 09 an d 2 01 0 b ecau se sh e was ab us edby in te rv en oran d was no t ab le to ch al le ng e th e tr eat m en t o f an y it em s i n t he joi nt returns inqu es ti on for

fearof i nt erv en or ’s ret al ia ti on . On Oct ob er 2 3, 2 01 4,
res po nd en t fi le d a n a ns wer t o t he am en de d p et it io n. In th atan swe r, res po nd en t de ni edth e al le ga ti on s i n t he am en de d p et it io n i n s up po rt o f pe ti ti on er’s cl ai m to rel ie f un de r se ct io n 6 01 5( f). OPINION Sect io n 6 01 3( a) p ro vi de s t ha t m arri edtax pa y ers m ay ele ctto fil e joi nt ly a ta x re turn . If a joi nttax return i s fi le d, the sp ou se s ar e joi nt ly andsev eral ly liab le fo r th e en ti re t ax du e. Sec. 6 01 3( d) (3 ); B ut le r v. C omm is si on er, 1 14 T.C. 27 6, 2 82 (2 00 0) . If cert ai n re qu ire m en ts are m et , a sp ou se m ay be rel ie ve d o f joi ntan d
se ve ral li ab il it y

inon e o f th ree ways. See s ec. 6 01 5( b) , (c), (f). Altho ug h re sp on de ntgra nt edpe ti ti on er re li ef u nd er s ect io n 6 01 5( c) wi th
res pe ctto th e p orti on of t he de fic ie nc y forth e ta xabl e y ear 2 01 0 t ha t was att rib ut ab le to res po nd en t’s d et erm in at io n t o d is al lo w cert ai n e xp en se s cl ai m edinth e- 20 -

[* 20 ] 20 10 law fi rm

Sch edul e C, sh e m ai nt ai ns th atsh e is als o e nt it le d t o re li ef

4
un de r se ct io n 6 01 5( f) wit h re sp ectto (1) th e p orti on of the de fic ie nc y forth e ta xabl e y ear 2 00 9 t ha t i s at tri bu tabl e to th e ex pe ns es for“ sh aredco m m is si on s” in th e 2 00 9 F WM Sch edul e C tha t re sp on de ntdi sa ll owe d a nd(2) th e p orti on of t he de fic ie nc y

forth e ta xabl e y ear 2 01 0 t ha t i s at tri bu tabl e to th e ex pe ns es for“ sh ared fees /c o- op bro ke r” i n the 20 10 FW M Sch edul e C tha t re sp on de ntdi sa ll owe d. 5 (The Co urt s ha ll refe r to th e ex pe ns es for “ sh aredco m

m is si on s” an d “ sh ared fees /c o- op bro ke r” cl ai m edinth e 2 00 9 F W M Sch edul e C an d t he 20 10 FW M Sch edul e C, res pe ct iv el y , th atres po nd en t d is al lo wedas t he erro ne ou s i te m s i n qu es ti on .) Res po nd en t an d i nt erv en ordi sa gr ee. Pet it io ne r be ars th e b ur de n o f pr ov in g t ha t s he is en ti tl edto rel ie f un de r se ct io n 6 01 5( f). See Rul e 1 42 (a); Po rte r v. C omm is si on er, 1 32 T.C. 20 3, 2 10 (2 00 9)
.

Res po nd en t m ad e n o d et erm in at io n i n t he no ti ce wi th res pe ctto th e 2 00 9

4 la w firm Sch edul e C. Inth e n ot ic e, res po nd en t m ad e certa in ot he r de te rm in at io ns with re sp ectto 5 th e 2 00 9 F WM Sch edul e C, th e 2 01 0 F W M Sch edul e C, th e 2 00 9 S ch edul e A, and th e 2 01 0 S ch edul e A. As th e Co urt u nd ers ta nd s p et it io ne r’s po si ti on , sh e is cl ai m in g re li ef u nd er s ec. 6 01 5( f) o nl y with re sp ectto th e res pe ct iv e p orti on s o f th e d efi ci en ci es forth e ta xabl e y ears 20 09 an d 2 01 0 tha t ar e se t fo rth inth e te xt .- 21 -

[* 21 ] Sect io n 6 01 5( f) p ro vi de s: SEC. 6 01 5. RELIEF FROM JOINT AND SEVERAL LIABILITY

ON JOINT RETURN. (f) Equi tabl e Rel ie f.--Un de r pr oc edur es pre sc rib edby the Secr et ary, if-
- (1 ) ta ki ng in to acco un t al l the fact s an d c irc um st an ces , itis in equi tabl e to ho ldth e in di vi du al li ab le foran y unpa idtax or an y de fic ie nc y

(oran y po rti on of e it he r); an d (2 ) rel ie f is no t av ai labl e to su ch in di vi du al un de r subs ecti on (b) or ( c), the Secr et ary m ay rel ie ve su ch in di vi du al of su ch li ab il it y . Pet it io ne r an d re sp on de ntag ree, an d i nt erv en or do es no t d is pu te , th atth e rel ie f th atpe ti ti on er s eek s i s n otav ai labl e to he r un de r se ct io n 6 01 5( b) or ( c), th ereb y sat is fy in g s ect io n 6 01 5( f)(2 ). They dis ag ree o ve r whe th er p et it io ne r is
en ti tl edto rel ie f un de r se ct io n 6 01 5( f). As d ire ct edby sect io n 6 01 5( f), th e Co m m is si on er o f In te rn al Rev enue ha s pr es cri be d p ro cedur es th atare ap pl ic ab le forth e y ears at i ss ue an d t ha t ar e ge ne ral ly to b e u se d i n d et erm in in g wh ethe r itwou ldbe in equi tabl e to fin d t he reque st in g s po us e li ab le forpa rt o r al l o f th e d efi ci en cy inqu es ti on . See Re v.

6
The Co urt i s n otbo un d b y rev enue pro cedur es . Howev er, we o fte n l oo k t o 6 th em forgu id an ce, es pe ci al ly whe n we are p res en te d wi th whet he r a reque st in g sp ou se is en ti tl edto rel ie f un de r se c. 60 15 (f). See , e.g., Ho ll im on v. Co m m is
si on er, T.C. Mem o. 2 01 5- 15 7, at*7 -* 8.- 22 -

[* 22 ] Pro c. 20 13 -3 4, s ec. 4 , 20 13 -4 3 I.R .B. 39 7, 3 99 -4 03 . Tho se pro cedur es in cl ud e se ve n t hr es ho ldco nd it io ns (th res ho ldco nd it io ns ) th atm us t b e sa ti sf

ie d i n or de r fo r th e reque st in g s po us e to be eli gi bl e fo r equi tabl e rel ie f un de r se ct io n 60 15 (f). See id . sec . 4.0 1, 2 01 3- 43 I.R.B. at39 9- 40 0. Res po nd en t co nc ed es , andin te rv en ordo es no t d is pu te , th atth e fi rs t fi ve th res ho ldco nd it io ns are s at is fie d. The p art ie s d is ag ree abo utwhethe r th e si xt h 7 8
an d s ev en th th res ho ldco nd it io ns are s at is fie d. Th e Co urt co ns id ers on ly the
se ve nt h t hr es ho ldco nd it io n. Th atis be cau se th e Co urt’s re so lu ti on of wh ethe r pe ti ti on er s at is fie s t he sev en th th res ho ldco nd it io n re so lv es whethe r sh e is en ti tl ed to rel ie f un de r se ct io n 6 01 5( f). As p ert in en t h ere, the sev en th th res ho ldco nd it io n i n R ev . Pro c. 20 13 -3 4,
se c. 4.0 1( 7) , 20 13 -4 3 I.R .B. at 3 99 -4 00 , is :

The fir stfiv e th res ho ldco nd it io ns are: (1) th e reque st in g s po us e fi le d a 7 joi ntreturn fo r th e ta xabl e y ear wi th res pe ctto whi ch he or s he see ks rel ie f; (2 ) rel ie f is no t av ai labl e u nd er s ec. 6 01 5( b) or ( c); (3) th e cl ai m forrel ie f is ti m el y fil ed ; (4 ) no ass et s wer e tr an sf erre d b etweenth e sp ou se s as pa rt o f a fraudul en t sc he m e b y

th e sp ou se s; an d (5 ) th e n on reque st in g s po us e d idno t tran sf er di squa li fie d a ss et s t o t he reque st in g s po us e. See R ev . Pro c. 20 13 -3 4, s ec. 4 .01 (1 )- (5 ), 20 13 -4 3 I.R .B. 39 7, 3 99
. The si xt h t hr es ho ldco nd it io n i s t ha t the reque st in g s po us e d idno t 8 kn owi ng ly part ic ip at e inth e fi li ng of afrau du le ntjoi ntreturn. Se e Rev . Pro c. 20 13 -3 4, s ec 4 .01 (6 ), 20 13 -4 3 I.R .B. at 3 99
.- 23 -

[* 23 ] (7 ) The in co m e ta x l iabi li ty from whi ch th e reque st in g s po us e se ek s re li ef i s at tri bu tabl e (ei th er i n fu ll or i n p art ) to anit em of the no nr eque st in g s po us e o r anun de rp aym en t re su lt in g fr om th e n on reque st in g s po us e’s in co m e. If th e li ab il it y is parti al ly attr ib ut ab le to th e reque st in g s po us e, th enrel ie f can on ly be co ns id eredforth e po rti on of t he li ab il it y

att rib ut ab le to th e n on reque st in g s po us e. Non ethe le ss , th e Servi ce wi ll co ns id er g ran ti ng rel ie f reg ard le ss of whe th er the un de rs ta te m en t, d efi ci en cy , or und erp aym en t i s at tri bu tab le (inful l o r in pa rt) to th e reque st in g s po us e if any of t he fol lo win g ex cep ti on s ap pl ie s: * * * * * * * (d ) Abu se . If th e reque st in g s po us e es tabl is he s t ha t h e o r sh e was th e v ic ti m

of abu se pri orto th e ti m e th e return was fil ed , andth at , as a res ul t o f th e p rio r ab us e, th e reque st in g s po us e was no t ab le to ch al le ng e th e tr eat m en t o f an y it em s o n t he return, o r was no t ab le to qu es ti on th e p aym en t o f an y ba la nc e due rep orte d o n t he return, fo r fearof t he no nr eque st in g s po us e’s ret al ia ti on , th e Servi ce wi ll co nsi de r gr an ti ng equi tabl e rel ie f ev enth ou gh th e d efi ci en cy or u nd erpa ym en t m ay

be att rib ut ab le inpa rt o r inful l t o a n i te m of t he requ es ti ng sp ou se . As the Co urt u nd ers ta nd s p et it io ne r’s po si ti on , sh e m ai nt ai ns th atsh e sa ti sf ie s t he sev en th th res ho ldco nd it io n i n R ev . Pro c. 20 13 -3 4, s ec. 4 .01 (7 ), an d i s en ti tl edto rel ie f un de r se ct io n 6 01 5( f) fo r th e res pe ct iv e p orti on s o f th e d efi ci en ci es forth e ta xabl e y ears 20 09 an d 2 01 0 t ha t ar e at tri bu tabl e to th e err on eo us it em s i n que st io n. Th atis be cau se , pet it io ne r co nt en ds , sh e was ab us edby in te rv en oran d, as a res ul t o f th atall eg edab us e, sh e was un ab le to ch al le ng e th e erro ne ou s i te m s i n que st io n fo r fea r of in te rv en or ’s ret al ia ti on . Res po nd en t- 24 -

[* 24 ] “ di sp ut es th atan y

all eg edab us e p rev en te d p et it io ne r fro m ch al le ng in g t he returns inqu es ti on .” Insupp ort o f pe ti ti on er’s co nt en ti on th atsh e was no t ab le to ch al le ng e th e erro ne ou s i te m s i n que st io n fo r fea r of in te rv en or ’s ret al ia ti on , pet it io ne r rel ie s on ly on h er o wn t es ti m on y . The Co urt d idno t fi ndpe ti ti on er t o b e cre di bl e. The 9 Co urt fo un d h er t es ti m on y to be incert ai n m at eri al res pe ct s ev as iv e, va gu e, co nc lu so ry , and/o r in co ns is te ntwith c ert ai n o th er ev id en ce i n t he reco rdth atth e Co urt fo un d t o b e cre di bl e. The C ou rt s ha ll no t re ly on t he tes ti m on y of p et it io ne r to est ab li sh he r po si ti on inth is cas e. See, e.g ., Tok ars ki v. Co m m is si on er, 8 7 T.C. 74 , 77 (19 86 ). The fact s t ha t the Co urt h as fou ndinth is cas e b el ie pe ti ti on er’s co nt en ti on s th atsh e was ab us edby int erv en oran d t ha t, as a res ul t o f th atall eg edab us e, sh e was no t ab le to ch al le ng e th e err on eo us it em s i n que st io n fo r fea r of in te rv en or ’s ret al ia ti on . Suff

ic e itto say here th atitwas p et it io ne r, no t i nt erv en or , who op erat edan d c on tro ll edFW M. Inad di ti on , itwas p et it io ne r who de cl in edto
rev ie w th e 2 00 9 jo in t re tu rnan d t he 20 10 joi ntreturn b efo re Mr . Tho m a h adth os e Pet it io ne r rel ie s o n h er o wn t es ti m on y an d o n t he res pe ct iv e te st im on ie s o f 9 cert ai n o th er wi tn es se s i n o rd er t o e st ab li sh he r cl ai m th atin te rv en orab us edhe r. At the co nc lu si on of t he tri al inth is cas e, th e Co urt co m m en te d o n t he res pe ct iv e te st im on ie s o f th os e o th er wi tn es se s, as well as the res pe ct iv e te st im on ie s o f pe ti ti on er an d i nt erv en or . The Co urt wi ll no t re pe atth os e co m m en ts he re.- 25 -

[* 25 ] returns fil edele ctro ni cal ly. Mo reo ve r, aro un d J anua ry 10 , 20 11 , bef

or e th e 20 10 joi ntreturn was ev enpre pa red , letalo ne fil ed , pet it io ne r an d i nt erv en or se pa rat ed
. W e b el ie ve th atpe ti ti on er’s co nt en ti on s t ha t s he was abu se d b y in te rv en or an d t ha t, as a res ul t o f th atall eg edab us e, sh e was no t ab le to ch al le ng e th e erro ne ou s i te m s i n que st io n fo r fea r of in te rv en or ’s ret al ia ti on were an aft erth ou gh t tha t o ccu rredto pe ti ti on er af te r th e Co urt h adin fo rm edres pe ct iv e co un se l fo r th e p art ie s dur in g t he Sep te m be r 11 , 20 14 tel ep ho ni c co nf eren ce tha t, as
res po nd en t m ai nt ai ne d i n re sp on de nt ’s m ot io n fo r su m m ary jud gm en t, the Co urt do es no t h av e juri sd ic ti on to co ns id er wh ethe r res po nd en t s ho ul d h av e g ran te d rel ie f to in te rv en orun de r se ct io n 6 01 5( c). In de ed , at t he ti m e o f th attel ep ho ni c co nf eren ce, p et it io ne r ha d n otcla im edinth e p et it io n i n t hi s ca se th atin te rv en or ’s al le ge d abu se pre ve nt edhe r fro m ch al le ng in g t he erro ne ou s i te m s i n que st io n fo r fearof i nt erv en or ’s ret al ia ti on . Nor h adsh e m ad e th atcla im inpe ti ti on er’s Fo rm 88 57 , inpe ti ti on er’s Fo rm 12 50 8, o r in pe ti ti on er’s ap pe al du rin g re sp on de nt ’s adm in is tra ti ve pro ceed in gs to co ns id er p et it io ne r’s cl ai m to rel ie f un de r se ct io n 60 15 . The fi rs t t im e th atpe ti ti on er cl ai m edth atin te rv en or ’s all eg edab us e pr ev en te d h er fro m

ch al le ng in g t he erro ne ou s i te m s i n que st io n fo r fea r of in te rv en or ’s ret al ia ti onwas i n t he am en de d p et it io n t ha t the Co urt al lo wedhe r to- 26 -

[* 26 ] fil e aft er the Sep te m be r 11 , 20 14 tel ep ho ni c co nf eren ce i n wh ic h i t h ad advi se d t he pa rti es ’ res pe ct iv e co un se l, i nt er al ia , th atitwou ldde ny resp on de nt ’s
m ot io n fo r su m

m ary jud gm en t wi th ou t p reju di ce. On t he reco rdbe fo re the Co urt, the Co urt fi nd s t ha t p et it io ne r ha s fa il edto
carry he r bu rd enof e st ab li sh in g t ha t, as a res ul t o f in te rv en or ’s all eg edab us e, sh e was no t ab le to ch al le ng e th e tr eat m en t o f th e err on eo us it em s i n que st io n fo r fea r of in te rv en or ’s ret al ia ti on . On th atreco rd , th e Co urt fu rth er fi nd s t ha t p et it io ne r ha s fa il edto carry

he r bu rd enof e st ab li sh in g t ha t s he sat is fie s t he sev en th th res hol d c on di ti on inRev . Pro c. 20 13 -3 4, s ec. 4 .01 (7 ), 20 13 -4 3 I.R .B. at 3 99 -4 00
. 1 0 Bas edup onth e Co urt’s ex am in at io n o f th e en ti re re co rdbe fo re the Co urt, th e Co urt fi nd s t ha t p et it io ne r ha s fa il edto carry he r bu rd enof e st ab li sh in g t ha t
Ass um in g a rg ue nd o t ha t p et it io ne r ha d c arri edhe r bu rd enof e st ab li sh in g 1 0 th atall sev enof t he th res ho ldco nd it io ns were s at is fie d, the Co urt wo ul d s ti ll fin d th atth e fac to rs enum erat edinRev . Pro c. 20 13 -3 4, s ec. 4 .03 , 20 13 -4 3 I.R .B. at 40 0- 40 3, wei gh ag ai ns t g ran ti ng pe ti ti on er re li ef u nd er s ec. 6 01 5( f). Sp eci fic al ly, on th e rec or d b efo re the Co urt, the Co urt fi nd s t ha t p et it io ne r wou ldno t s uf fer eco no m ic ha rd sh ip if re li ef i s n otgra nt ed ; p et it io ne r ha d re as on to kn ow o f th e erro ne ou s i te m s i n que st io n t ha t g av e ri se to th e p orti on s o f th e res pe ct iv e de fic ie nc ie s fo r th e ta xabl e y ears 20 09 an d 2 01 0 fo r whi ch sh e is cla im in g re li ef un de r se c. 60 15 (f); pu rs ua ntto th e se pa rat io n a gr eem en t p et it io ne r ha s a l eg al ob li ga ti on to ho ldin te rv en orha rm le ss fro m an y an d a ll ob li ga ti on s re la ti ng to he r own ers hi p o f FWM, in cl ud in g t ax ob li ga ti on s; pe ti ti on er b en efi te d s ig ni fic an tl y fro m th e res pe ct iv e u nd ers ta te m en ts att rib ut ab le to th e err on eo us it em s i n qu es ti on ; an d p et it io ne r ha s fa il edto co m pl y with t he tax laws forat l eas t o ne y ear aft er the tax ab le y ears at i ss ue , nam el y , th e ta xabl e y ear 2 01 1. Se e id
.- 27 -

[* 27 ] sh e is en ti tl edto rel ie f un de r se ct io n 6 01 5( f) wit h re sp ectto th e res pe ct iv e po rti on s o f th e d efi ci en ci es for th e ta xabl e y ears 20 09 an d 2 01 0 tha t ar e attri bu tab le to th e err on eo us it em s i n que st io n. The Co urt co ns id ers no w whet he r, as in te rv en orm ai nt ai ns , th e Co urt s ho ul d im po se a pe na lt y

on pe ti ti on er u nd er s ect io n 6 67 3( a)(1 ) an d s an ct io n h er at to rn ey of reco rdun de r se ct io n 6 67 3( a)(2 ). Sect io n 6 67 3( a)(1 ) au th or iz es th e Co urt t o requi re a t ax pa y er t o p ay

to th e Uni te d S ta te s a p en al ty in an am ou ntno t t o e xc eed $2 5,0 00 when ev er i t ap pe ars to th e Co urt, i nt er al ia , th ata pr oc eed in g b efo re i t
was in st itut edor m ai nt ai ne d p rimaril y forde la y , sec . 66 73 (a)( 1) (A), orth atth e ta xp ay er’s p os it io n i n s uc h apro ceed in g i s fr iv ol ou s o r gr ou nd le ss , sec . 66 73 (a)( 1) (B). Sec ti on 66 73 (a)( 2) au th or iz es th e Co urt t o re qu ire an y att orne y adm it te d t o p ract ic e b efo re the Co urt wh o h as m ul ti pl ie d t he pro ceed in gs inan y cas e u nr eas on ab ly andve xa ti ou sl y to pa y pe rs on al ly the ex ces s co st s, ex pe ns es , an d a tt orne y s’ fees reas on ab ly inc urredbe cau se of s uc h c on du ct . The Co urt b el ie ve s t ha t p et it io ne r in st itut edan d m ai nt ai ne d t hi s ca se pr im ari ly for d el ay . The Co urt al so be li ev es th atpe ti ti on er h as adva nc edan d
m ai nt ai ne d apo si ti oninth is cas e th atis gro un dl es s. No ne th el es s, the Co urt s ha ll
no t atth is ti m e im

po se a pe na lt y

un de r se ct io n 6 67 3( a)(1 ) on pe ti ti on er. The Co urt caut io ns he r th atsh e m ay be subjec t t o s uc h ape na lty if i n t he futur e sh e- 28 -

[* 28 ] in st itut es or m ai nt ai ns a pr oc eed in g i n t hi s C ou rt p rimaril y forde lay an d/ or he r po si ti on inan y

su ch pro ceed in g i s fr iv ol ou s o r gr ou nd le ss . See Ab ram s v . Co m -m is si on er, 8 2 T.C. 4 03 , 40 9- 41 3 (1 98 4) ; Whi te v. Co m m is si on er, 7 2 T.C. 11 26 , 11 35 -1 13 6 (1 97 9)
. The Co urt b el ie ve s t ha t p et it io ne r’s at to rn ey of r eco rdm

ul ti pl ie d t he pr oc eed in gs inth is cas e u nr eas on ab ly andve xa ti ou sl y . Non ethe le ss , th e Co urt sh al l n otsan ct io n h im

at t hi s t im e u nd er s ect io n 6 67 3( a)(2 ). The C ou rt c au ti on s hi m th athe m ay

be subjec t t o s uc h asan ct io n i f in th e fu tu re h e m ul ti pl ie s t he pr oc eed in gs inany

cas e b efo re thi s C ou rt u nr eas on ab ly andve xa ti ou sl y . See Nis Fam il y Tr. v. Co m

m is si on er, 1 15 T.C. 52 3, 5 47 -5 53 (20 00 ). The Co urt h as co ns id eredall of t he co nt en ti on s an d arg um en ts of t he pa rti es th atare n otdi sc us se d h erei n, an d t he Co urt fi nd s t he m to be witho utm eri t, irr el ev an t, an d/ orm oo t. To re fle ctth e fo reg oi ng , Deci si on wil l b e en te redfor
res po nd en t.