T.C. Mem o. 2 01 4- 19 0

UNITED STAT ES TAX COURT

VIRGIL V. W ORK, JR., Pe ti ti on er v . COMM ISSI ONER OF INTERNAL REVENUE, Resp on de nt

Doc ke t No . 22 14 -1 1. Fi le d S ep te m be r 17 , 20 14
. Harry Charl es , for

pe ti ti on er. St ev enA. Hall er an d S te ve n W. LaBou nt y , forres po nd en t.

MEMORANDUM FINDINGS OF FACT AND OPINION
PARIS , Ju dg e: Pet it io ne r br in gs th is cas e b efo re the Co urt i n d is pu te of a fin al de te rm in at io n d en y in g h is reque stforrel ie f fro m joi ntan d s ev eral li ab il it y un de r se ct io n 6 01 5( b) , (c), an d (f ). 1
Unl es s o th erwi se in di cat ed , all sec ti on refe ren ces are t o t he Int ern al 1 (co nt in ue d...)- 2 -

[* 2] The on ly iss ue is whet he r pe ti ti on er i s en ti tl edto rel ie f fro m joi ntan d
se ve ral li ab il it y

un de r se ct io n 6 01 5( b) , (c), o r (f) fo r un de rs ta te m en ts of t ax forth e 20 06 an d 2 00 7 t ax y ears . 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. Th e st ip ul at io n o f fact s an d t he att ach edex hi bi ts are i nc or po rat edhe rei n b y

th is refe ren ce. Pet it io ne r res id edin Mi ss ou ri a t the ti m e th e p et it io n was ti m el y fil ed
. I. Bac kg ro un d Pet it io ne r an d Kat he rin e Workwere m arri edin19 98 an d a re cu rren tl y
m arri edan d l iv in g t og ethe r. Pet it io ne r an d M rs . W ork h av e th ree m in orch il dr en . Pet it io ne r gr adua te d fr om Mi ss ou ri Un iv ers ity

of S ci en ce an d Tec hn ol og y wit h aba ch el or ’s deg ree i n e ng in eeri ng m an ag em en t. He l at er ea rn eda m as te r’s de gr ee i n b us in es s ad m in is tra ti on in op erat io ns an d s y st em s. Pet it io ne r di d n ot pu rs ue stud ie s i n e co no m ic s, fi na nc e, oracco un ti ng inhi s fo rm al educ at io n. 2

(...co nt inue d) 1 Rev enue Co de of 1 98 6, as am en de d a ndin effe ctat a ll rel ev an t t im es , andall Ru le refe ren ces are t o t he Tax C ou rt Rul es of P ract ic e an d P ro cedur e. Pet it io ne r to okon e acc ou nt in g c ou rs e b utdi d n otpu rs ue anacco un ti ng 2 de gr ee o r certi fic at io n.- 3 -

[* 3] Dur in g 2 00 6 a nd20 07 pe ti ti on er was em pl oyed as a sa le s an d c on su lt in g syste m s en gi ne er fo r In te rn at io na l Bu si ne ss Mac hi ne Co rp . (IBM ) bu t i s n ow ret ire d. Dur in g t he 20 06 an d 2 00 7 t ax y ears , Mrs . W ork, u nd er the nam e K.V. Ent erp ris es , so ldreal est at e, m an ag eda ren ta l p ro pe rty, andpro vi de d aut om at ed te ll er m ach in es (ATMs ). In a dd it io n, M rs . W ork was a sa le sp ers onfora co m pa ny th atm ark et edpre pa idba nkcard s t o t een ag ers . Pet it io ne r an d M rs . W ork m ai nt ai ne d i nd iv idua l ch eck in g a cco un ts an d a joi ntch eck in g a cco un t. Pet it io ne r us edhi s i nd iv idua l ac co un t t o d ep os ithi s wag es an d t o p ay

ho us eh ol d e xp en se s s uc h a s t he m ortg ag e, ut il it ie s, p ro pe rty in su ran ce, p ro pe rty tax es , car p aym en ts , andfoo d. Pe ti ti on er d idno t wri te ch eck s fro m th e joi ntch eck in g a cco un t. Ho wev er, Mr s. Workus edth e joi ntch eck in g acco un t, an d i nc om e ta x re fu nd s wer e d ep os it edin to th atacco un t. Mr s. Workals o
m ai nt ai ne d abu si ne ss acco un t fo r K.V. Ente rp ris es . Peti ti on er n ev er u se d t he bu si ne ss acco un t, b uthe ha d a ndco nt in ue s t o h av e si gn at ory au th or it y . Pet it io ne r an d M rs . W ork t im el y fil edjoi ntin co m e ta x re tu rn s fo r ta x years 20 06 an d 2 00 7. Si nc e th ey be ga n fi li ng ele ctro ni cal ly, pe ti ti on er an d M rs . W ork de ve lo pe d asp eci fic pro cedur e fo r pr ep ari ng th ei r joi ntin co m e ta x re tu rn . Each y ear p et it io ne r in it ia te d t he return e le ctro ni cal ly. He en te redhi s wag es fro m hi s- 4 -

[* 4] Fo rm W -2 , W ag e an d Tax Sta te m en t, al on g wi tham ou nt s t he y ha d re cei ve d fo r in te res t an d d iv id en ds , gai n o r lo ss fro m sec ur it ie s, an d i te m iz edde du ct io ns su ch as m ortg ag e in te res t o n the ir p ers on al res id en ce. Aft er p et it io ne r co m pl et ed wha t h e co ns id eredto be hi s p orti on of t he return, M rs . W ork wo ul d e nt er h er in fo rm at io n a ndth ensubm itth e co m pl et edreturn. Pe ti ti on er d idno t at te m ptto
rev ie w th e co m

pl et edreturn b efo re Mr s. Workfin al iz edan d s ub m it te d e ach return. Onc e th e return was fil ed , Mrs . W ork wo ul d p rin t a c op y of t he return a nd gi ve itto pe ti ti on er. Aga in , pet it io ne r di d n otrev ie w th e p rin te d re tu rnbe fo re pl aci ng th e co py of th e return i n afil e fo r rec or dk eep in g. Aft er the return was subm it te d, M rs . W ork wo ul d i nf orm pe ti ti on er o f whe th er the re was anam ou nt
owe d o r a ref

un d o f ta x. Any

am ou ntowedto th e In te rn al Rev enue Serv ic e (IR S)
wou ldbe pa idby pet it io ne r fro m hi s i nd iv idua l b an k a cco un t. Ho wev er, i f th e W orks rece iv eda refu nd , itwas d ep os it edin to th e joi ntbankacco un t. II. Natu re o f Mrs . W ork’s Bu si ne ss es an d K.V. Ent erp ris es K.V. E nt erp ris es sel ls real est at e an d m ark et s ATMs
. K.V. Ent erp ris es 3
was cap it al iz edwith p ro ceed s fr om a lo anm ad e joi nt ly to p et it io ne r an d M rs . On Sc he du le s C , Pro fitor Lo ss Fro m Bu si ne ss , Mrs . W ork d es cri be d K.V. 3 Ent erp ris es ’ pr in ci pa l b us in es s as “pr ov id er o f ATMs ” an d re al est at e sa le s. Th e na tu re o f th e ATM p orti on of the bu si ne ss is no t cl ear f ro m th e rec or d.- 5 -

[* 5] W ork. Pe ti ti on er d idno t wo rk foror m an ag e K.V. Ente rp ris es . Mrs . W ork in co rp or at edK.V. E nt erp ris es , Inc ., inth e St at e o f Mi ss ou ri i n 2 00 2. In 20 05 , 20 06 , and20 07 pe ti ti on er o wne d 5 0% o f K.V. Ente rp ris es ’ st oc k a ndMrs . W ork
own edth e rem ai ni ng 50 % of t he ou ts ta nd in g s ha res . In ad di ti on , pet it io ne r is li st edon th e 2 00 6 a nd20 07 an nu al rep orts as i ts vi ce p res id en t alt ho ug h h e h ad 4
no m ean in gf

ul em pl oym en t wi th K.V. E nt erp ris es an d d idno t i nv ol ve hi m se lf wit h M rs . W ork’s b us in es s o pe rat io ns . Add it io na ll y , in20 05 Mrs . W ork i nh eri te d h er m ot he r’s res id en ce i n S t. Lou is , Mis so ur i. Mr s. Worklea se d t hi s p ro pe rty du rin g 2 00 6 a nd20 07 , whi ch pr oduc edm on th ly rent al in co m e th atren te rs pa idto K.V. E nt erp ris es . In M arch 20 07 th is pro pe rty was tr an sf erre d b y qu it cl ai m

de edto Mrs . W ork a ndpe ti ti on er, an d t he y joi nt ly refin an cedth e m ortg ag e. Mrs . W ork h ire d a n a cco un ti ng firm to pre pa re the co rp or at e in co m e ta x returns forK.V. E nt erp ris es . For t ax y ears 20 06 an d 2 00 7 K.V. Ent erp ris es ti m el y fil edFo rm s 1 12 0S , U.S. Inco m e Tax Return fo r anS Co rp or at io n. Fo r ta x year 20 06 K.V. E nt erp ris es ’ Fo rm 11 20 S rep orte d g ro ss rece ip ts of $ 36 ,49 0 a nd cl ai m edde du ct io ns of $ 69 ,32 8, yield in g $ 32 ,83 8 i n l os se s. Fo r ta x year 20 07
All of t he an nu al rep orts were fi le d a ndsi gn edby Mrs. Workas p res id en t. 4 Mrs . W ork i s al so th e reg is te redag en t fo r th e co rp or at io n.- 6 -

[* 6] Fo rm 11 20 S rep orte d g ro ss rece ip ts of $ 49 ,17 6 a ndcla im edde du ct io ns of $7 3,1 15 , y ie ld in g $ 23 ,93 9 i n l os se s. Th e acc ou nt in g fi rm pre paredth e Sch edul es K-1 , Shareh ol de r’s Sh are o f In co m e, Deduc ti on s, Cr ed it s, et c., refl ect in g e ach sh areh ol de r’s pe rcen ta ge of l os se s. Th e in fo rm at io n re fle ct edon th es e Sch edul es K-1 sh ou ldha ve be enrep orte d o n t he W orks ’ pe rs on al Fo rm s 1 04 0, U.S. In di vi du al Inc om e Tax Return, o n p artII o f th ei r Sch edul es E, Sup pl em en ta l In co m e an d Lo ss , refl ect in g t he flo wth ro ug h n atur e o f anS co rp or at io n. Whe n t he W orks fil edth ei r Fo rm s 1 04 0 fo r ta x years 2 00 6 a nd20 07 , Mrs
. W ork d idno t i nc lu de an y of t he sh areh ol de r in fo rm at io n i n re ga rdto th e lo ss de du ct io ns th atK.V. E nt erp ris es cla im ed . Ins te ad , Mrs . W ork dup li cat edall of t he in co m e an d d educ ti on s ei th er o n h er Sc he du le s C or o n t he Sch edul es E onpa rt I in reg ardto ren ta l re al est at e. Inad di ti on to th e subs ta nt ia l d educ ti on s cl ai m edon he r co rp or at e return, s he cla im edon th ei r in di vi du al returns sev eral lar ge ad di ti on al de du ct io ns , su ch as c ar an d t ru ckexpe ns es an d i nt eres t ex pe ns es . For 20 06 th e Work s cl ai m edde du ct io ns fora $4 9,8 32 bu si ne ss lo ss an d a$6 ,41 9
ren ta l re al est at e lo ss . For 2 00 7 t he W orks cla im edde du ct io ns fora $8 2,5 04 bu si ne ss lo ss , a $2 0,9 16 ren ta l re al est at e lo ss , anda $3 0,0 38 ne t o pe rat in g l os s; th os e to ta ls are al l re fle ct edon th e fro ntpa ge of t he ir F orm 10 40 . Add it io na ll y , fo r 20 06 th e Work s fa il edto cal cu la te th ei r to ta l t ax (li ne s 5 8- 63 were l eftbl an k- 7 -

[* 7] on th ei r Fo rm

10 40 ); t he y

m erel y cla im eda refu ndof the ir wi th ho ld in g l es s th e am ou ntth ey

cal cu la te d a s t he ir c hi ldtax cred it , whi ch y ie ld eda $3 1,1 61 refu nd . For 2 00 7 t he W orks di d n otcal cu la te eithe r th ei r to ta l i nc om e o r th ei r to ta l t ax (li ne s 4 3- 63 were l eftbl an k o n t he ir F orm 10 40 ); t he y

m erel y cla im eda refu ndof 1 00 % of the ir wi th ho ld in gs , whi ch y ie ld eda refu ndof $ 22 ,52 7. Pri orto ta x years 2 00 6 a nd20 07 refu nd s wer e aro un d $ 10 ,00 0. III. Not ic e o f Defi ci en cy an d P rio r Tax Co urt Ca se On M arch 13 , 20 09 , res po nd en t i ss ue d ajoi ntno ti ce o f de fic ie nc y to pe ti ti on er an d M rs . W ork fo r ta x years 2 00 6 and20 07 . Res po nd en t s aw th atK.V. Ent erp ris es ’ pu rp orte d i nc om e an d d educ ti on s ap pe aredto be dupl ic at edan d rep orte d o n t he Fo rm s 1 04 0, Sc he du le s C an d S ch edul es E, andth e ta x re tu rn s fo r th e S co rp or at io n andth atpe ti ti on er an d M rs . W ork d idno t re po rt a ny of th e in fo rm at io n o n i nc om e o r lo ss es fro m th e Sch edul es K-1 o n t he ir S ch edul e E for ei th er o f th e ta x years a t i ss ue . Res po nd en t d is reg ard edth e Fo rm s 1 12 0S be cau se th e am ou nt s re po rte d o n t he Sch edul es K-1 a tt ach edto th e Fo rm s 1 12 0S were n ot refl ect edon th e Work s’ Form s 1 04 0. Thus , res po nd en t m ad e ad jus tm en ts to th e W orks ’ pe rs on al returns fortax y ears 20 06 an d 2 00 7 t ha t wer e b as edso le ly on
erro rs de te rm in edwith re sp ectto th e at ta ch edSch edul es C an d S ch edul es E.- 8 -

[* 8] Pet it io ne r an d M rs . W ork t im el y fil eda pe ti ti on with t he Co urt u nd er do ck etNo. 1 45 59 -0 9 i n re sp on se to th e n ot ic e o f de fic ie nc y . The ca se di d n ot pr oc eedto tri al , andth e p art ie s s et tl edth e cas e atdo ck etNo. 1 45 59 -0 9 b y st ip ul at edde ci si on en te redby the Co urt o n M arch 9, 2 01 0. In th e st ip ul at ed de ci si on pe ti ti on er an d M rs . W ork c on ced edinful l the de fic ie nc ie s i n i nc om e ta x de te rm in edin th e n ot ic e o f de fic ie nc y , andres po nd en t co nc ed edth e se ct io n 66 62 (a) a ccu racy-rela te d p en al ti es fortax y ears 20 06 an d 2 00 7. Th e co ns eque nc es of t he de fic ie nc y cas e are ful ly des cri be d i n t he de ci si on do cu m en t atdo ck etNo. 1 45 59 -0 9; bu t fo r th e p ur po se s o f th is cas e, th e Co urt wi ll no te th at th e d efi ci en ci es were p rem is edon th e fac ts th atpe ti ti on er an d M rs . W ork: (1 ) co ul d n otful ly sub st an ti at e m os t o f th e Sch edul e C ex pe ns es for20 06 an d 20 07 , (2) co ul d n otful ly sub st an ti at e m os t o f th e Sch edul e E ex pe ns es for 20 06 5
an d 2 00 7, (3) fai le d t o re po rt a dd it io na l i nc om e o f $2 ,23 4 fr om Sta te tax refu nd s 6
rece iv edin 20 06 , (4) fai le d t o re po rt M rs . W ork’s u ne m pl oym en t co m

pe ns at io n o f

Fo r ta x years 2 00 6 a nd20 07 res po nd en t d is al lo wedSch edul e C ex pe ns es 5 to ta li ng $6 9,7 16 an d $ 11 9,2 29 , res pe ct iv el y . Fo r ta x years 2 00 6 a nd20 07 res po nd en t d is al lo wedSch edul e E ex pe ns es 6 to ta li ng $1 ,83 5 a nd$5 ,90 0, re sp ect iv el y .- 9 -

[* 9] $2 ,80 0 re cei ve d i n 2 00 7, (5) fai le d t o re po rt a dd it io na l re nt al in co m e o f 7 $2 ,60 0 re cei ve d i n 2 00 7, an d (6 ) erro ne ou sl y de du ct edth ei r m ortg ag e in te res t o f $5 ,20 9 t wice (on Sch edul e A, Ite m iz edDedu ct io ns , andon Sch edul e E) fo r 20 06
. 8 Co ns eque nt ly, res po nd en t d et erm in edde fic ie nc ie s i n i nc om e ta x o f $2 1,5 28 an d $4 5,4 38 for20 06 an d 2 00 7, re sp ect iv el y . IV. Pet it io ne r’s Pres en t Ca se On M ay 20 , 20 10 , res po nd en t re cei ve d p et it io ne r’s Fo rm 88 57 , Reque stfor In no cen t Sp ou se Rel ie f, se ek in g re li ef fo r ta x years 2 00 6 a nd20 07 . Also on May 20 , 20 10 , res po nd en t re cei ve d M rs . W ork’s Fo rm 12 50 8, Qu es ti on na ire for Non
Reque st in g S po us e. In Fo rm 12 50 8 M rs . W ork s ta te d t ha t al l erro rs were 9 at tri bu tabl e to he r an d t ha t s he di d n otwis h h er h us ba ndto be he ldjoi nt ly liab le
Iro ni cal ly, up on furth er re vi ew of th e Tur bo Tax a tt ach m en ts th e $ 2,8 00 of 7 un em pl oym en t co m

pe ns at io n was rep orte d, b utin th e cal cu la ti on itwas n ette d ag ai ns t n etop erat in g l os s (NOL) ca rry fo rward s g en erat edfro m th e d is al lo wed po rti onof b us in es s u se of t he ho m e as “ othe r in co m e” an d i t re du cedth e NOL fro m -$3 2,8 38 to -$3 0,0 38 an d was rep orte d o n l in e 2 1, i ns te adof o n l in e 1 9 a s un em pl oym en t co m

pe ns at io n. Why

Mrs . W ork was rece iv in g u ne m pl oym en t co m pe ns at io n was un cl ear f

ro m th e rec or d. Bec au se of t he se ad

jus tm en ts th e al te rn at iv e m in im um tax an d s el f- 8 em pl oym en t t ax were re cal cu la te d, re su lt in g i n a n i nc reas e to tax . Add it io na ll y , an NOL carryforwardwas d is al lo wedfor20 07 , res ul ti ng in in crea se d t ax ab le in co m e of $3 0,0 38 for20 07 . The ad jus tm en ts als o re su lt edin a reduc ti onof t he ch il d t ax cred itto $3 00 for20 06 an d c om pl et e d is al lo wan ce o f th e ch il d t ax cred itfor20 07
. Mrs . W ork d idno t i nt erv en e an d d idno t t es ti fy inth is cas e. 9- 10 -

[* 10 ] forhe r m is ta ke s. OnDecem be r 30 , 20 10 , res po nd en t i ss ue d afin al de te rm in at io n d en y in g p et it io ne r’s reque stfor rel ie f. OPINION Pet it io ne r cl ai m s tha t h e is en ti tl edto rel ie f un de r se ct io n 6 01 5 fr om th e ta x li ab il it ie s re fle ct edon th e fi na l d et erm in at io n fo r ta x years 2 00 6 a nd20 07 . Excep t
as ot he rwis e p ro vi de d i n s ect io n 6 01 5, t he sp ou se reque st in g re li ef g en eral ly bears th e b ur de n o f pr oo f. Ru le 14 2( a); Altv. Co m m is si on er, 1 19 T.C. 30 6, 3 11 (20 02 ), aff’d, 1 01 Fed . App x. 3 4 (6 th Cir . 20 04 ). The C ou rt h as juri sd ic ti on to rev ie w res po nd en t’s d en ia l o f pe ti ti on er’s reque stfor rel ie f un de r se ct io n 6 01 5. Se e se c. 60 15 (e)( 1)
. Sect io n 6 01 3( d) (3 ) pr ov id es th attax pa y ers fil in g jo in t Fe de ral in co m e ta x returns are jo in tl y

an d s ev eral ly liab le forth e ta xe s due . Howev er, s ect io n 6 01 5
m ay pro vi de rel ie f fro m

joi ntan d s ev eral li ab il it y un de r certa in co nd it io ns . Gen eral ly, a reque st in g s po us e m ay ob ta in rel ie f whe n h e o r sh e d idno t h av e actua l o r co ns tru ct iv e kno wled ge of t he un de rs ta te m en t o f ta x o n areturn, s ec. 60 15 (b ); o r, if n o l on ge r m arri edto th e n on reque st in g s po us e, th e reque st in g sp ou se m ay

li m itli ab il it y

to hi s o r he r al lo cab le po rti on of a ny defi ci en cy , sec . 60 15 (c); or, i f in el ig ib le forrel ie f un de r subs ect io n (b ) or(c), the reque st in g- 11 -

[* 11 ] sp ou se m ay

ob ta in rel ie f whe n, i n v ie w of a ll th e fac ts an d c irc um st an ces , it
wou ldbe in equi tabl e to ho ldth e reque st in g s po us e li ab le , sec . 60 15 (f). I. Rel ie f Und er Se ct io n 6 01 5( b) Und er s ect io n 6 01 5( b) (1 )(A)-( E), a reque st in g s po us e se ek in g re li ef fro m joi ntan d s ev eral li ab il it y m us t s at is fy

each of t he fol lo win g re qu ire m en ts : (A) a joi ntreturn was fil edforth e ta xabl e y ear; (B) the re i s anun de rs ta te m en t o f ta x at tri bu tabl e to anerro ne ou s i te m of t he no nr eque st in g s po us e; (C) the reque st in g sp ou se est ab li sh es th atin si gn in g t he return h e o r sh e d idno t kno w, andha d n o reas onto kn ow, o f th e u nd ers ta te m en t; (D) itis in equi tabl e to ho ldth e reque st in g sp ou se li ab le forth e d efi ci en cy att rib ut ab le to th e u nd ers ta te m en t; an d (E) th e reque st in g s po us e ti m el y ele ct s t he be ne fit s o f se ct io n 6 01 5( b) . A requ es ti ng sp ou se m us t s at is fy

all fiv e requi rem en ts to qu al ify for re li ef. See Altv. Co m m is si on er, 1 19 T.C. at 3 13
. The for eg oi ng requi rem en ts of s ect io n 6 01 5( b) (1 ) are st at edin th e co nju nc ti ve . Accor di ng ly, a fai lu re t o m eetan y on e o f th em

pre ve nt s a r eque st in g sp ou se fro m

qu al ifyin g fo r se ct io n 6 01 5( b) rel ie f. See Al t v . Comm is si on er, 1 19 T.C. at 3 13 . Res po nd en t d oe s n otdi sp ut e th atpe ti ti on er fi le d jo in t i nc om e ta x returns with M rs . W ork fo r 20 06 an d 2 00 7. Fu rth er, res po nd en t d oe s n otdi sp ut e th atpe ti ti on er t im el y

fil eda reque stfor

rel ie f. Howev er, res po nd en t ar gu es th at- 12 -

[* 12 ] pe ti ti on er h as no t s at is fie d t he requi rem en ts setforthin subp arag rap h (B ), (C), o r (D) o f se ct io n 6 01 5( b) (1 ). Ther efo re, p et it io ne r be ars th e b ur de n o f sh owi ng th at : the re i s an un de rs ta te m en t o f ta x a tt rib ut ab le to anerro ne ou s i te m of Mrs . W ork; in si gn in g t he return h e d idno t kno w, andha d n o re as on to kn ow, of th e u nd ers ta te m en t; an d i t i s i ne qu it ab le to ho ldhi m li ab le for th e d efi ci en cy at tri bu tabl e to th e u nd ers ta te m en t. See Altv. Co m m is si on er, 1 19 T.C. at 3 13
. A. Sect io n 6 01 5( b) (1 )(B) Inacco rd an ce wi th sec ti on 60 15 (b )(1 )(B) , pet it io ne r m us t s ho w th atth e erro ne ou s i te m s g iv in g ri se to th e u nd ers ta te m en t o f ta x a re at tri bu tabl e so le ly to Mrs . W ork. Gen eral ly, anerro ne ou s i te m is att rib ut edto th e in di vi du al who se act iv it ie s g av e ri se to th e it em . Sec. 1 .60 15 -1 (f)(1 ), In co m e Tax Reg s. To de te rm in e who is res po ns ib le forth e erro ne ou s i te m s, the Co urt m ay als o l oo k t o th e sp ou se who wron gf

ul ly repo rte d o r cl ai m edth e it em (with c ert ai n e xc ep ti on s no t ap pl ic ab le he re). See Dil lo n v . Comm is si on er, T.C. Mem o. 1 99 8- 5; Est at e o f Kil li anv. Co m

m is si on er, T.C. Mem o. 1 98 7- 36 5. The fact s i n t he reco rdde m on st rat e th atall of t he de du ct io ns an d i nc om e om is si on s fo r 20 06 an d 2 00 7 a re at tri bu tabl e so le ly to M rs . W ork. Th e o nl y ex cep ti on is in reg ardto th e 2 00 6 S ta te tax refu ndan d t he dupl ic at edm ortg ag e in te res t d educ ti on , whi ch are at tri bu te d t o b ot h p et it io ne r an d M rs . W ork.- 13 -

[* 13 ] Pet it io ne r co m

pl et edhi s “ po rti on ” o f eac h o f th e returns an d g av e th em to Mrs . W ork. Atth is po in t, Mr s. Work inpu t the rem ai ni ng in fo rm at io n, i nc lu di ng erro ne ou s d educ ti on s, an d i nc orrect ly repo rte d h er u ne m pl oym en t co m

pe ns at io n an d a dd it io na l re nt al in co m e. The i nc orrectin fo rm at io n l at er g av e ri se to th e de fic ie nc ie s. Inad di ti on , Mrs . W ork c on ced edin Fo rm 12 50 8 t ha t s he m ad e th e m is ta ke s on th e 2 00 6 a nd20 07 tax returns . On Fo rm 12 50 8 M rs . W ork s ta te d t ha t pe ti ti on er was no t i nv ol ve d wi th --an d d idno t o pe rat e--t he bu si ne ss fro m whi ch Mrs . W ork d eri ve d t he erro ne ou s t ax ex pe ns e d educ ti on s an d u nr ep orte d re nt al in co m e, ev enth ou gh he was a50 % own er o f K.V. Ente rp ris es . Jo in t o wne rs hi p, b y

it se lf, i s n otde te rm in at iv e o f whe th er the erro ne ou s it em is att rib ut ab le to on e o r bo th sp ou se s. Ro we v. Co m m is si on er, T.C. Mem o. 20 01 -3 25 ; Bu ch in e v . Comm is si on er, T.C. Mem o. 1 99 2- 36 , aff’d, 2 0 F .3d17 3 (5 th Cir . 19 94 ). A key facto r is whet he r an d t o wh atex te ntth e reque st in g s po us e vo lu nt ari ly part ic ip at edin th e in ve st m en t tha t g av e ri se to th e err on eo us it em . Gen eral ly, a reque st in g s po us e who vo lu nt ari ly agree s t o e nt er i nt o a n in ve st m en t an d wh o a ct iv el y pa rti ci pa te s i n i t i s p recl ud edfro m att rib ut in g t he
en ti re i nv es tm en t t o t he no nr eque st in g s po us e. See Ab el ei n v . Comm is si on er, T.C. Mem o. 2 00 4- 27 4; Cap eh artv. Co m m is si on er, T.C. Mem o. 2 00 4- 26 8, af f’d,- 14 -

[* 14 ] 20 4 F ed . App x. 6 18 (9t h C ir. 2 00 6) . Howev er, i f th e reque st in g s po us e is
no t an act iv e p art ic ip an t, the reque st in g s po us e m ay qu al ify for re li ef ev enth ou gh
na m edas ash areh ol de r or pa rtn er. Ju el l v . Comm is si on er, T.C. Mem o. 2 00 7- 21 9. Acco rd in gl y , pet it io ne r sa ti sf ie s t he sec ti on 60 15 (b )(1 )(B) requi rem en t tha t th e err on eo us it em s cl ai m edon th e 2 00 6 re tu rn , bu t fo r th e St at e ta x re fu ndan d th e dup li cat edm ortg ag e in te res t, an d t he erro ne ou s i te m s cl ai m edon th e 2 00 7 return are at tri bu tabl e to Mrs . W ork. B. Sect io n 6 01 5( b) (1 )(C) Und er s ect io n 6 01 5( b) (1 )(C) , a reque st in g s po us e m us t s ho w th athe or s he di d n otkn ow an d h adno reas on to kn ow t ha t the re was anun de rs ta te m en t o f ta x a t th e ti m e h e o r sh e si gn edth e return. Fa ct or s t o c on si de r in an al y zi ng whethe r th e reque st in g s po us e h ad“ reas on to kn ow” of t he un de rs ta te m en t i nc lu de : (1 ) th e reque st in g s po us e’s le ve l o f educ at io n; (2) th e reque st in g s po us e’s in vo lv em en t i n th e fam il y ’s bu si ne ss an d fi na nc ia l af fai rs ; (3 ) th e p res en ce o f ex pe nd itur es th at ap pe ar l av is h o r un us ua l wh enco m pa redto th e fam il y ’s pas t l ev el s o f in co m e, st an da rdof l iv in g, an d s pe nd in g p at te rn s; an d (4 ) th e n on reque st in g s po us e’s
ev as iv en es s an d d ecei t co nc ern in g t he co up le ’s fin an ces . Pric e v . Comm is si on er, 88 7 F .2d95 9, 9 65 (9t h C ir. 1 98 9) ; M or a v . Comm is si on er, 1 17 T.C. 27 9, 2 87 (2 00 1) . The Co urt o f App eal s fo r th e Eig hth C irc ui t, t o wh ic h thi s ca se is- 15 -

[* 15 ] ap pe al ab le ab se nta st ip ul at io n t o t he co nt rary, has ad op te d t he Pri ce an al y si s. See Erda hl v. Co m m is si on er, 9 30 F.2d58 5, 5 89 (8t h C ir. 1 99 1) (d is cu ss in g wh ethe r ta xp ay er kne w or h adreas on to kn ow t ha t the de du ct io n wou ldgi ve ris e to a subs ta nt ia l und ers ta te m en t), re v’g T.C. Me m o. 1 99 0- 10 1. Mo reo ve r, a ta xp ay er h as reas on to kn ow o f anun de rs ta te m en t i f he ha s a du ty to i nqui re an d fa il s t o s at is fy th atdu ty. Pri ce v . Comm is si on er, 8 87 F.2dat 96 5. A reque st in g s po us e h as a du ty to i nqui re wh enhe “ kn ow[ s] eno ug h fa ct s t o pu t * * * [hi m ] on no ti ce tha t s uc h a n u nd ers ta te m en t ex is ts .” Id . W e m ay im pu te th e requi si te kn owl ed ge to th e reque st in g s po us e u nl es s h e sa ti sf ie s h is du ty of in qu iry. Port er v . Comm is si on er, 1 32 T.C. 20 3, 2 11 -2 12 (20 09 ). Pet it io ne r is a co ll eg e g radua te with am as te r’s de gr ee i n b us in es s adm in is tra ti on . Altho ug h h e d idno t p ur su e a d eg ree i n a cco un ti ng , eco no m ic s, o r fin an ce, h e is hi gh ly edu cat ed . This fact orweig hs ag ai ns t g ran ti ng rel ie f fo r bo th th e 2 00 6 a nd20 07 tax y ears . Pet it io ne r li ve d wi th Mrs . W ork dur in g t he 20 06 an d 2 00 7 t ax y ears . Pet it io ne r was in vo lv edwith, an d l arg el y in co nt ro l o f, m os t o f th e h ou se ho ld
ex pe ns es ; h e m ad e th e m ortg ag e, ut il it ie s, p ro pe rty tax , andcar p aym en ts fro m hi s in di vi du al acco un t. Pet it io ne r co nt en ds th athe di d n otha ve a way to ve rif y Mrs
. W ork’s b us in es s fi na nc es . On th e co nt rary, he h adacce ss to th e co up le ’s join t- 16 -

[* 16 ] ch eck in g a cco un t an d K.V. Ent erp ris es ’ bu si ne ss acco un t, d es pi te th e fac t th athe ch os e n otto act iv el y m on it orth e acc ou nt s. He co ul d h av e v eri fie d t he
na tu re o f Mrs . W ork’s i nc om e an d e xp en se s re po rte d o n t he joi ntreturn b y acce ss in g t he acco un t s ta te m en ts . Furthe r, pe ti ti on er cl ai m s t ha t h e was un ab le to
ve rif y Mrs . W ork’s fi na nc es or v eri fy he r rec ei pt s b ecau se he di d n otha ve acce ss to he r pa ss wor d- pr ot ect edco m pu te r. Even if p et it io ne r di d n otha ve acce ss to Mrs . W ork’s co m

pu te r, Mrs . W ork p ro vi de d c op ie s o f supp orti ng do cu m en ts an d
rece ip ts to hi m

with t he fin al pri nt edtax returns . This fact orals o wei gh s ag ai ns t gr an ti ng rel ie f. It i s u nc le ar wh ethe r pe ti ti on er an d M rs . W ork h ada subs ta nt ia l
un ex pl ai ne d c hang e in th e fam il y ’s st an dardof l iv in g, al th ou gh th e Fo rm 11 20 S refl ect edov er $ 40 ,00 0 i n c red itcardde btfor th e y ears at i ss ue . Neithe r res po nd en t o r pe ti ti on er o ffer edev id en ce as to th is fact or , anditis th eref or e a ne ut ral fact orforth e 2 00 6 a nd20 07 tax y ears . Alt ho ug h p et it io ne r su gg es te d a t tria l tha t M rs . W ork’s ac ti on s wer e frau du le nt , no ev id en ce was pre se nt edsh owi ng Mrs . W ork was de cep ti ve or ev as iv e to wardhi m

ab ou t ei th er h er p ers on al an d b us in es s fi nanc es or t he fin al returns for20 06 an d 2 00 7. Pe ti ti on er h adacce ss to K.V. E nt erp ris es ’ bu si ne ss acco un t an d c ou ldha ve eas il y ve rif ie d t he na tu re o f in co m e an d e xp en se s l is te d o n- 17 -

[* 17 ] th ei r joi ntreturns . Mrs . W ork g av e p et it io ne r a p rin te d c op y of e ach joi nt return upo n c om

pl et io n, i nc lu di ng supp orti ng rece ip ts . Peti ti on er h adam pl e ti m e an d o pp ortu ni ty to re vi ew th e joi ntreturns bu t el ect edno t t o. Pe ti ti on er cann ot
av oi d l iabi li ty by

act iv el y ele ct in g t o b e u ni nf

orm edab ou t the co nt en ts of h is Fed eral tax returns , esp eci al ly whe n h e h adph y si cal po ss es si onof t he returns at is su e. Pet it io ne r te st ifi edth atMrs . W ork h ad“ a te m pe r”. Thi s s ta te m en t i s v ag ue an d n otne ces saril y

in di cat iv e o f de cep ti on or e va si ve ne ss . Ulti m at el y , th is fact or weig hs ag ai ns t g ran ti ng rel ie f. A reque st in g s po us e al so ha s a r eas on to kn ow o f anun de rs ta te m en t i f he ha s a duty

to in qu ire an d fa il s t o s at is fy th atdu ty. The re qu es ti ng sp ou se ha s a du ty to i nqui re wh enhe kn ows en ou gh fact s t o p uthi m onno ti ce tha t s uc h a n un de rs ta te m en t ex is ts . See Pri ce v . Comm is si on er, 8 87 F.2dat 9 65 -9 66 ; Lev in v. Co m m is si on er, T.C. Mem o. 1 98 7- 67 ; s ee al so Erda hl v. Co m m is si on er, 9 30 F.2d 58 5. Su ch no ti ce i s p ro vi de d i f th e reque st in g s po us e kno ws s uf fic ie ntfact s s uc h th ata reas on ab ly pru de nttax pa y er i n h is po si ti on wou ldqu es ti on th e le gi ti m acy of th e d educ ti on s. Pri ce v . Comm is si on er, 8 87 F.2dat 9 65 ; s ee al so Erdahl v. Co m m is si on er, 9 30 F.2d58 5. In su ch a sc en ari o, a dut y to in qu ire ari se s wh ic h, i f
no t s at is fie d b y

th e reque st in g s po us e, wil l re su ltinco ns tru ct iv e kno wled ge of t he- 18 -

[* 18 ] un de rs ta te m en t. Pri ce v . Comm is si on er, 8 87 F.2dat 9 65 ; s ee al so Erda hl v. Co m m is si on er, 9 30 F.2d58 5. Pet it io ne r ha d e no ug h kno wled ge of t he fact s u nd erl y in g t he de du ct io ns for bo th 20 06 an d 2 00 7 t o c au se a reas on ab ly pru de nttax pa y er i n h is po si ti on to qu es ti on th ei r le gi ti m acy. Altho ug h p et it io ne r an d M rs . W ork h adrece iv edtax refu nd s fo r pr io r y ears , th e ref un ds for20 06 an d 2 00 7 wer e si gn ifi can tl y lar ge r th anth os e fo r pr io r y ears . The l arg e ex pe ns e d educ ti on s re su lt edinrep orte d
ov erp aym en ts of 9 2% a nd10 0% o f pe ti ti on er’s wit hh ol di ng cred it s fo r 20 06 an d 20 07 , res pe ct iv el y . Refu nd s fo r 20 06 an d 2 00 7 wer e $ 31 ,16 1 a nd$2 2,5 27 , res pe ct iv el y , com

pa redwith p rio r y ears ’ refu nd s o f aro un d $ 10 ,00 0. A si m pl e co m pa ris on in di cat es th atth e Work s cl ai m edrefu nd s fo r th e y ears in is su e th at
were m or e th ando ub le th ei r pr ev io us refu nd s, a fa ctwhi ch is cert ai nl y en ou gh to pu t a r eas on ab le tax pa y er o n n ot ic e to askqu es ti on s ab ou t the si ze o f th ei r refu nd s. A ta xp ay er wh o fi le s a jo in t re tu rnwith h is sp ou se m ay no t turn abl in d ey e to th e joi ntreturn a ndth ereb y av oi d t he du ty to i nqui re. Pri ce v . Co m m is si on er, 8 87 F.2dat 9 65 (ci ti ng Levi n v . Comm is si on er, T.C. Mem o. 1 98 7- 67 ). Pet it io ne r can no t av oi d l iabi li ty by ch oo si ng no t t o a ckno wled ge th e ref un d. Alt ho ug h p et it io ne r co nt en ds th athe th ou gh t the lar ge refu nd s fo r ta x years 20 06 an d 2 00 7 wer e n orm al be cau se K.V. E nt erp ris es was a“ st artup ” v en tu re,- 19 -

[* 19 ] th es e la rg e ref

un ds sh ou ldha ve pu t h im on no ti ce tha t the re co ul d b e a subs ta nt ia l o ve rs ta te m en t o f de du ct io ns , esp eci al ly sin ce the 20 07 refu ndwas
m or e th ando ub le th e 2 00 5 re fu nd , andth e 2 00 6 re fu ndwas m or e th antri pl e th e 20 05 refu nd . Whe n re sp on de nt ’s cou ns el sh owe d p et it io ne r co pi es of the Sch edul es C fro m

th e 2 00 6 a ndth e 2 00 7 jo in t re turn s, h e ad m it te d t ha t the de du ct io ns cla im edwere “ sh oc ki ng ly larg e” an d t ha t a r eas on ab le pe rs on wou ld qu es ti on su ch lar ge ex pe ns e d educ ti on s. Pet it io ne r di d n otactas areas on ab ly prud en t t ax pa y er wo ul d h av e, an d h e is no t re li ev edfro m hi s re sp on si bi li ty to pr op erl y in qu ire ab ou t the co nt en ts of ajoi ntreturn. Th e Co urt fi nd s t ha t pe ti ti on er h adreas on to kn ow o f th e u nd ers ta te m en t o f ta x t ha t re su lt edfro m th e de du ct io ns cla im edan d t he un rep orte d re nt al in co m e fo r th e 2 00 6 a nd20 07 tax y ears . Accor di ng ly, th is fact or weig hs ag ai ns t g ran ti ng rel ie f. The fact s i nd ic at e th atpe ti ti on er s ho ul d h av e kno wn o r ha d re as on to kn ow of th e u nd ers ta te m en ts of t ax fro m erro ne ou s d educ ti on s an d i nc om e o m is si on s fo r th e 2 00 6 a nd20 07 tax y ears . Accor di ng ly, pe ti ti on er d oe s n otsat is fy sec ti on 60 15 (b )(1 )(C) with re sp ectto th e err on eo us in co m e an d e xp en se s re po rte d fo r th e 20 06 an d 2 00 7 t ax y ears . Und er s ect io n 6 01 5( b) (1 )(A)-( E), a reque st in g s po us e se ek in g re li ef fro m joi ntan d s ev eral li ab il it y m us t s at is fy

all of t he requi rem en ts . As th e requi rem en ts- 20 -

[* 20 ] of s ect io n 6 01 5( b) (1 ) are st at edin th e co nju nc ti ve , a fai lu re t o m eetan y on e of th em pre ve nt s a r eque st in g s po us e fro m qu al ifyin g fo r se ct io n 6 01 5( b) rel ie f. Pet it io ne r ha s s at is fie d s om e, bu t n otall , of the fiv e requi rem en ts of s ect io n 60 15 (b ): He h as fai le d t o p ro ve th athe sat is fie s s ect io n 6 01 5( b) (1 )(C)
. Acco rd in gl y , he d oe s n otqu al ify for re li ef u nd er s ect io n 6 01 5( b) . See Altv. Co m m is si on er, 1 19 T.C. at 3 14
. II. Rel ie f Und er Se ct io n 6 01 5( c) Und er s ect io n 6 01 5( c), a d iv or cedor s ep arat edsp ou se m ay ele ctto li m it li ab il it y for a de fic ie nc y

on a joi ntreturn t o t he po rti on all oc ab le to hi m or h er. A reque st in g s po us e can m ak e a v al idele ct io n o nl y if: (1) th e reque st in g s po us e is
no lo ng er m arri edto , is no t p artof t he same ho us eh ol d a s, o r is leg al ly sep arat ed fro m , hi s o r he r sp ou se ; (2 ) th e reque st in g s po us e m ak es a ti m el y ele ct io n; an d (3 ) th e Sec ret ary do es no t d em on st rat e th atth e reque st in g s po us e h adactua l kn owl ed ge at t he ti m e th e reque st in g s po us e si gn edth e return o f anit em gi vi ng ris e to a de fic ie nc y . Sec. 6 01 5( c)(3 ). Pet it io ne r is no t el ig ib le to m ak e th e el ect io n b ecau se he an d M rs . W ork a re st il l m arri edan d a re cu rren tl y li vi ng to ge th er i n t he same ho us eh ol d. Acco rd in gl y , pe ti ti on er d oe s n otm eetth e fi rs t re qu ire m en t t o m ak e a v al idsec ti on 60 15 (c)- 21 -

[* 21 ] ele ct io n a ndcan no t re cei ve rel ie f un de r se ct io n 6 01 5 (c ). See s ec. 60 15 (c)( 3) (A)(i ). III. Rel ie f Und er Se ct io n 6 01 5( f) Sect io n 6 01 5( f) g ran ts th e Co m m is si on er d is cret io n t o re li ev e anin di vi du al fro m joi ntli ab il it y , wher e rel ie f is no t av ai labl e und er s ect io n 6 01 5( b) or ( c), i f 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 d efi ci en cy . The Co m m is si on er re cen tl y pr es cri be d re vi se d g ui de li ne s i n R ev . Pro c. 20 13 -3 4, 2 01 3- 43 I.R.B. 3 97 , m od ifyin g a ndsupe rs ed in g R ev . Pro c. 20 03 -6 1, 2 00 3- 2 C .B. 29 6, tha t ar e co ns id eredin de te rm in in g wh ethe r itis in equi tabl e to ho lda reque st in g s po us e li ab le forall or p artof t he li ab il it y foran y unpa idtax or d efi ci en cy . Altho ug h 1 0 th e Co urt co ns ul ts th es e g ui de li ne s wh enrev ie win g t he Co m m is si on er’s d en ia l o f rel ie f, se e Wash in gt on v. Co m m is si on er, 1 20 T.C. 13 7, 1 47 -1 52 (20 03 ), we are n ot bo un d b y th em in as m uc h a s o uran al y si s an d d et erm in at io n u lt im at el y tu rnon an ev al ua ti onof a ll th e fac ts an d c irc um st an ces , see Pu ll in s v . Comm is si on er, 1 36

Rev . Pro c. 20 13 -3 4, s ec. 7 , 20 13 -4 3 I.R .B. 39 7, 4 03 , pro vi de s t ha t the 1 0 gu id el in es are ef

fect iv e fo r reque st s fo r rel ie f fi le d o n o r aft er Se pt em be r 16 , 20 13 , an d re qu es ts forequi tabl e rel ie f pe nd in g o n S ep te m be r 16 , 20 13 , whet he r be fo re th e IRS , th e Offi ce o f App eal s, o r a Fed eral co urt.- 22 -

[* 22 ] T.C. 43 2, 4 38 -4 39 (20 11 ); P orte r v. C omm is si on er, 1 32 T.C. 20 3 a t 2 10 ; Hud gi ns v. Co m

m is si on er, T.C. Mem o. 2 01 2- 26 0, at*3 9- *4 0. A. Thres ho ldCo nd it io ns forGran ti ng Rel ie f The rev enue pro cedur e b eg in s b y est ab li sh in g t hr es ho ldrequi rem en ts th at
m us t b e sa ti sf

ie d b efo re anequi tabl e rel ie f reque stpu rs ua ntto 60 15 (f) m ay be
co ns id ered . See Re v. Pr oc . 20 13 -3 4, s ec. 4 .01 , 20 13 -4 3 I.R .B. at 3 99 -4 00 . Tho se co nd it io ns are: (1) th e reque st in g s po us e fi le d ajoi ntreturn fo r th e ta xabl e y ear fo r whi ch rel ie f is so ug ht ; (2 ) rel ie f is no t av ai labl e to th e reque st in g s po us e u nd er se ct io n 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 tra ns ferr edbe twee n t he sp ou se s as pa rt o f a fraudul en t s ch em e; (5) th e no nr eque st in g s po us e d idno t tran sf er d is qu al ifi edass et s t o t he reque st in g s po us e; (6 ) th e reque st in g s po us e d idno t kno win gl y pa rti ci pa te in th e fi li ng of afrau du le nt joi ntreturn; an d (7 ) ab se ntcert ai n e nu m erat edex cep ti on s, the tax li ab il it y fro m whi chth e reque st in g s po us e se ek s re li ef i s at tri bu tabl e to anit em of t he
no nr eque st in g s po us e. Id
. Res po nd en t co nc ed es th atpe ti ti on er m eet s t hr es ho ldco nd it io ns 1 t hr ou gh 6 bu t as se rts th atpe ti ti on er h as no t m etth e fi na l thr es ho ldco nd it io n. Re sp on de nt
co nc ed es th atpe ti ti on er h as sat is fie d the att rib ut io n t hr es ho ldco nd it io n fo r th e it em s at tri bu te d s ol el y

to Mrs . W ork a ndhe r po rti on of t he joi ntit em s an d i s- 23 -

[* 23 ] el ig ib le to be co ns id eredforequi tabl e rel ie f un de r se ct io n 6 01 5( f) fo r th os e po rti on s o f th e d efi ci en ci es . Howev er, res po nd en t as se rts th atpe ti ti on er h as fai le d to sat is fy th e at tri bu ti on th res ho ldco nd it io ns forth os e it em s s ol el y att rib ut edto hi m an d h is po rti on of t he joi ntit em s al lo cat edto hi m . The Co urt d is ag rees with re sp on de nt ’s po si ti on . Peti ti on er d oe s m eetth e fin al th res ho ldforatt rib ut io n b ecau se (as di sc us se d abo ve ) th e err on eo us it em s cl ai m edon th e 2 00 6 re tu rn , bu t fo r th e St at e ta x re fu ndan d t he dupl ic at ed
m ortg ag e in te res t, an d t he erro ne ou s i te m s cl ai m edon th e 2 00 7 t ax return a re at tri bu tabl e to Mrs . W ork. Se e supr a p p. 1 2- 14 . There fo re, p et it io ne r sa ti sf ie s al l of th e se ve n thr es ho ldco nd it io ns ex cep t fo r th e p orti on of t he 20 06 Sta te tax refu ndan d t he dupl ic at edm ortg ag e in te res t at tri bu te d t o h im
. B. Str eam li ne d Det erm in at io n Gra nt in g R el ie f Whe n t he th res ho ldco nd it io ns ha ve be enm et , as t he y are h ere, Re v. Pr oc . 20 13 -3 4, s ec. 4 .02 , 20 13 -4 3 I.R .B. at 4 00 , set s fo rth ele m en ts th ata reque st in g sp ou se m us t s at is fy

to qu al ify for a s tre am li ne d d et erm in at io n b y th e Co m m is si on er g ran ti ng rel ie f un de r se ct io n 6 01 5( f). Tho se co nd it io ns are: (1) th e reque st in g s po us e is no lo ng er m arri edto , is leg al ly sep arat edfro m , or h as no t be ena m em

be r of th e sa m e h ou se ho ldas t he no nr eque st in g s po us e atany ti m e du rin g t he 12 -m on th pe rio d e nd in g o n t he da te th e IRS m ak es it s d et erm in at io n;- 24 -

[* 24 ] (2 ) th e reque st in g s po us e wil l s uf fer e co no m ic hard sh ip if re li ef i s n ot gr an te d; an d (3 ) in anun de rs ta te m en t o r de fic ie nc y cas e su chas t hi s, the reque st in g s po us e h adno kn owl ed ge or r eas on to kn ow tha t the re was an un de rs ta te m en t o r de fic ie nc y on th e joi ntin co m e ta x re tu rn . Id. Pet it io ne r is st il l m arri edto an d c urren tl y li vi ng with M rs . W ork, an d t hu s he do es no t qua li fy

fora st ream li ne d d et erm in at io n. C. Fact or s Us edTo Det erm in e Wheth er Re li ef Will Be Gran te d Whe re, as he re, a re qu es ti ng sp ou se m eet s t he th res ho ldco nd it io ns bu t fa il s to qu al ify for re li ef u nd er the rev enue pro cedur e fo r a s tre am li ne d d et erm in at io n, a reque st in g s po us e m ay

st il l b e el ig ib le forequi tabl e rel ie f if , tak in g i nt o a cco un t al l the fact s an d c irc um st an ces , itwou ldbe in equi tabl e to ho ldth e reque st in g sp ou se li ab le forth e u nd erp aym en t. See id . The rev enue pro cedur e li st s t he fo ll owi ng no ne xc lu si ve fact or s t ha t the Co m m is si on er t ak es in to acco un t wh en de te rm in in g wh ethe r to gra ntequi tabl e rel ie f: (1 ) m ari ta l s ta tu s; (2) eco no m ic ha rd sh ip ; (3 ) in th e cas e o f anun de rs ta te m en t o r de fic ie nc y , whet he r th e reque st in g s po us e kne w or h adreas on to kn ow o f th e it em gi vi ng ris e to th e un de rs ta te m en t o r de fic ie nc y as o f th e d at e th e joi ntreturn was fil edor r eas on ab ly be li ev edby the reque st in g s po us e to ha ve be enfil ed ; (4 ) le ga l o bl ig at io n;- 25 -

[* 25 ] (5) si gn ifi can t b en efi t; (6) co m pl ia nc e wit h t ax laws ; an d (7 ) m en ta l o r ph y si cal he al th . Id. Inm ak in g o urde te rm in at io n u nd er s ect io n 6 01 5( f), th e Co urt co ns id ers th es e fac to rs as we ll as a ny oth er re le va ntfact or s. No si ng le fact oris de te rm in at iv e, an d a ll fact or s s ha ll be co ns id eredan d wei gh edap pr op ria te ly. Haig h v . Comm is si on er, T.C. Mem o. 2 00 9- 14 0.

1. Ma rit al Sta tu s If the reque st in g s po us e is no lo ng er m arri edto th e n on reque st in g s po us e, th is fact orwil l wei gh in fav orof g ran ti ng rel ie f. See Re v. Pr oc . 20 13 -3 4, s ec. 4.0 3( 2) . For p ur

po se s o f th is sec ti on a reque st in g s po us e wil l b e tr eat edas b ei ng

“ no lo ng er m arri edto th e n on -reque st in g s po us e” i f th e reque st in g s po us e is di vo rcedfro m

th e n on reque st in g s po us e. Id . sec . 4.0 3( 2) (a)( i). If th e reque st in g sp ou se is st il l m arri edto th e n on reque st in g s po us e, th is fact oris ne ut ral . Id. Pet it io ne r is st il l m arri edto an d i s cu rren tl y li vi ng with M rs . W ork. Th us , th is fact or is ne ut ral
. 2. Eco no m ic Hard sh ip Gen eral ly, eco no m ic ha rd sh ip ex is ts when co ll ect io n o f th e ta x l iabi li ty w il l
ren de r th e reque st in g s po us e u nabl e to m eetba si c li vi ng ex pe ns es . Id. s ec. 4.0 3( 2) (b ), 20 13 -4 3 I.R .B. at 4 01 . If de nyin g re li ef fro m joi ntan d s ev eral li ab il it y- 26 -

[* 26 ] wil l n otcau se th e reque st in g s po us e to su ffereco no m ic ha rd sh ip , th is fact or
m ay be ne ut ral . Id. A reque st in g s po us e’s cu rren t i nc om e, ex pe ns es , andass et s are c on si de redto de te rm in e whe th er ec on om ic hard sh ip wil l re su lt . Sec. 30 1.6 34 3- 1( b) (4 ), Pro ced . & Adm in . Reg s. Pet it io ne r is ret ire d wi tha m on th ly in co m e o f $1 0,0 45 , in cl ud in g re nt al in co m e, an d e xp en se s o f $8 ,45 5. In ad di ti on , as of M arch 20 07 he is th e joi ntown er o f ren ta l re al est at e Mrs . W ork i nh eri te d i n 20 05 . On th e b as is of t he reco rd , pet it io ne r ha s n otpro ve n tha t h e wil l s uf fer
eco no m ic ha rd sh ip if t he Co urt d en ie s h im rel ie f. Thi s fa ct oris ne ut ral
. 3. Kn owl ed ge or R eas on To Kn ow Kno wled ge ex is ts when th e reque st in g s po us e kne w or h adreas onto kn ow of th e it em gi vi ng ris e to th e u nd ers ta te m en t o r de fic ie nc y as o f th e d at e th e joi nt return (i nc lu di ng a joi ntam en de d re tu rn ) was fil ed , or t he da te th e reque st in g sp ou se reas on ab ly bel ie ve d t he joi ntreturn was fil ed . Id. s ec. 4 .03 (2 )(c) (ii ). If th e reque st in g s po us e d idno t kno w andha d n o re as on to kn ow o f th e it em gi vi ng ris e to th e u nd ers ta te m en t, thi s fa ct orwil l wei gh in fav orof r el ie f. Id. If t he reque st in g s po us e kne w or h adreas on to kn ow o f th e it em gi vi ng ris e to th e un de rs ta te m en t, thi s fa ct orwil l wei gh ag ai ns t re li ef. Id
. As p rev io us ly dis cu ss ed , pet it io ne r kn ew orha d re as on to kn ow o f th e un de rs ta te m en ts of jo in t i nc om e ta x fo r 20 06 an d 2 00 7. Se e supr a p p. 1 4- 20 . A- 27 -

[* 27 ] reque st in g s po us e is co ns id eredto be on no ti ce tha t the re m ay be an un de rs ta te m en t o f ta x l iabi li ty whe n t he re i s a s ub st an ti al reduc ti on intax li ab il it y . Jo ns on v. Co m

m is si on er, 1 18 T.C. 10 6 (2 00 2) , aff’d, 3 53 F.3d11 81 (10 th Cir
. 20 03 ). Furth er, a t ax pa y er h as a du ty to i nqui re wi th res pe ctto lar ge de du ct io ns an d c an no t es cap e res po ns ib il ity by sim pl y ig no rin g t he co nt en ts of t he return. See, e.g ., Esta te of J ack so n v . Comm is si on er, 7 2 T.C. 3 56 (19 79 ); M cCo y v. Co m m is si on er, 5 7 T.C. 7 32 (19 72 ); Lev in v. Co m m is si on er, T.C. Mem o. 1 98 7- 67
. Pet it io ne r ad m it te d t ha t the refund s fo r th e 2 00 6 a nd20 07 tax y ears were si gn ifi can tl y

lar ge r th anth e ref

un ds forpri ory ears . Agai n, p et it io ne r can no t b e rel ie ve d o f li ab il it y

si m pl y be cau se he ch os e to ig no re the refu nd s an d the
un rep orte d i nc om e. Thi s fa ct orweig hs ag ai ns t g ran ti ng rel ie f.

4. Leg al Obl ig at io n Fo r pu rp os es of t hi s fa ct or , a leg al ob li ga ti on is anob li ga ti on ari si ng fro m a di vo rce d ecre e o r ot he r le ga ll y bi nd in g a gr eem en t. Rev . Pro c. 20 13 -3 4, s ec. 4.0 3( 2) (d ), 20 13 -4 3 I.R .B. at 4 02 . There is no ag reem en t b etweenpe ti ti on er an d Mrs . W ork t ha t o bl ig at es he r to be so le ly liab le for th e joi ntin co m e ta x un de rs ta te m en ts for20 06 an d 2 00 7. Th is fact oris ne utral
.- 28 -

[* 28 ] 5. Si gn ifi can t Be ne fit Thi s fa ct orco ns id ers whet he r th e reque st in g s po us e rec ei ve d asi gn ifi can t be ne fit , beyon d n orm al supp ort, fro m th e u np ai d i nc om e ta x l iabi li ty. Id. s ec. 4.0 3( 2) (e). No rm al supp ort i s m eas ur edby the cir cum st an ces of t he pa rti cu la r pa rty. Port er v . Comm is si on er, 1 32 T.C. at 2 12 . This fact orwil l wei gh in fav orof gr an ti ng rel ie f if

th e n on reque st in g s po us e si gn ifi can tl y be ne fit edfro m

th e u np ai d ta x o r un de rs ta te m en t an d t he reque st in g s po us e h adli tt le or n o b en efi t o r th e no nr eque st in g s po us e en

joy edth e b en efi t t o t he reque st in g s po us e’s de tri m en t. Rev . Pro c. 20 13 -3 4, s ec. 4 .03 (2 )(e)
. Pet it io ne r te st ifi edth atth e p ro ceed s fr om th e ref un d wer e d ep os it edin to th e joi ntch eck in g a cco un t, an acco un t h e h adacce ss to bu t d idno t u se . Desp it e th e fac t tha t p et it io ne r ha d a cces s t o t he refu nd s o f $3 1,1 61 in 20 06 an d $ 22 ,52 7 i n 20 07 , itis un cl ear f

ro m th e ev id en ce wh ethe r he be ne fit eddi rect ly from th e un de rs ta te m en ts . Peti ti on er al so cred ib ly test ifi edth athe do es no t kno w what Mrs . W ork d idwith t he pro ceed s. Th ere i s n o e vi de nc e to su gg es t tha t p et it io ne r be ne fit edot he r th anin di rect ly from th e u nd ers ta te m en ts , bu t the se lar ge refu nd s were d ep os it edin to a joi ntch eck in g a cco un t t o wh ic h h e h adleg al acce ss . The st ip ul at edde ci si on in th e cas e atdo ck etNo. 1 45 59 -0 9 re fle ct ed$2 1,5 28 in ad di ti on al tax li ab il it y

fortax y ear 2 00 6, t he y ear f orwhi ch th e Work s re cei ve d a- 29 -

[* 29 ] $3 1,1 61 refu nd(92 % of the ir wi th ho ld in gs ). Add it io na ll y , th e d eci si on refl ect ed$4 5,4 38 in ad di ti on al tax li ab il it y for tax y ear 2 00 7, t he y ear f orwhi ch th e Work s re cei ve d a$2 2,5 27 refu nd(10 0% o f th ei r withh ol di ng s) . There fo re, th is fact orweig hs ag ai ns t g ran ti ng rel ie f.

6. Co m pl ia nc e With Inc om e Tax Laws Thi s fa ct orco ns id ers whet he r th e reque st in g s po us e h as m ad e a g oo d- fai th effo rt t o c om

pl y with t he Fed eral in co m e ta x l aws in y ears aft er the y ears for whi chrel ie f is reque st ed . Id. s ec. 4 .03 (2 )(f). If th e reque st in g s po us e rem ai ns
m arri edto th e n on reque st in g s po us e, whe th er l eg al ly sep arat edor l iv in g apa rt, a nd
co nt in ue s t o fi le joi ntreturns with t he no nr eque st in g s po us e aft er re qu es ti ng rel ie f, th enth is fact or

wil l b e n eu tra l i f th e joi ntreturns are i n c om pl ianc e wit h the tax la ws b utwil l wei gh ag ai ns t g ran ti ng rel ie f if th e returns are n otin co m pl ia nc e. Id
. se c. 4.0 3( 2) (f)(i i). Th e p art ie s ag ree t ha t p et it io ne r ha s fi le d a ll requi redtax returns an d i s o th erwi se in co m pl ia nc e wit h F ed eral in co m e ta x l aws forth e ta xabl e y ears aft er 2 00 7. Thus , th is fact or is ne ut ral
. 7. Me nt al or P hysic al Heal th Thi s fa ct orco ns id ers whet he r th e reque st in g s po us e was in po orph y si cal or
m en ta l h eal th . This fact orwil l wei gh in fav orof g ran ti ng rel ie f if th e reque st in g sp ou se was i n p oo r m en ta l o r ph y si cal he al that t he ti m e th e returns to whi ch th e- 30 -

[* 30 ] reque stforrel ie f rel at es were fi le d (a t the ti m e th e reque st in g s po us e reas on ab ly bel ie ve d the return o r returns were fi le d) or a t the ti m e th e reque st in g sp ou se reque st edrel ie f. Id. s ec. 4 .03 (2 )(g ), 20 13 -4 3 I.R .B. at 4 03
. The IRS wi ll co ns id er the na tu re, ex te nt , anddu rat io n o f th e co nd it io n, in cl ud in g t he on go in g e co no m ic im pa ctof t he il ln es s. Id . If th e reque st in g s po us e was inne it he r po orph y si cal no r po orm en ta l h eal th , th is fact oris ne ut ral . Id. Pet it io ne r te st ifi edth atno em ot io na l o r ph y si cal sp ou sa l ab us e o ccu rreddu rin g th ei r m arri ag e. Add it io na ll y , pet it io ne r co nc ed es th athe was n otin po or m en ta l o r ph y si cal he al th at t he ti m e th e returns fortax y ears 20 06 an d 2 00 7 wer e si gn ed
. Thu s, thi s fa ct or

is ne utral
. D. Con cl us io n o f Sec ti on 60 15 (f) Re li ef W ei gh in g a ll th e fac ts an d c irc um st an ces , we are n otpe rs ua de d t ha t i t
wou ldbe in equi tabl e to de ny pet it io ne r rel ie f un de r se ct io n 6 01 5( f). As the pr eced in g d is cu ss io n s ho ws, fi ve of t he fact or s ar e n eu tra l an d two wei gh ag ai ns t gr an ti ng pe ti ti on er re li ef. Acco rd in gl y , pet it io ne r is no t en ti tl edto rel ie f fro m joi ntan d s ev eral li ab il it y un de r se ct io n 6 01 5( f) fo r th e 2 00 6 a nd20 07 tax y ears .- 31 -

[* 31 ] IV. Co nc lu si on Pet it io ne r is no t en ti tl edto rel ie f fro m joi ntan d s ev eral li ab il it y forth e 2 00 6
an d 2 00 7 t ax y ears un de r se ct io n 6 01 5( b) , (c), o r (f). Pet it io ne r is joi nt ly and
se ve ral ly liab le forde fic ie nc ie s fo r ta x years 2 00 6 a nd20 07
. The Co urt h as co ns id eredall of t he arg um en ts m ad e b y th e p art ie s an d, t o th e ex te ntth ey

are n otad dr es se d h erei n, t he y are co ns id eredun ne ces sa ry , m oo t, irr el ev an t, o r wit ho utm eri t. To re fle ctth e fo reg oi ng , An ap pr op ria te de ci si on wil l b e en te red
.