1Unless otherwise indicated, all section references are to

the Internal Revenue Code (Code) in effect at all relevant times. 

All Rule references are to the Tax Court Rules of Practice and

Procedure.

T.C. Memo. 2004-190

UNITED STATES TAX COURT

MAUREEN MONSOUR, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 18147-02. Filed August 25, 2004.

Steven L. Sablowsky, for petitioner.

Russell F. Kurdys, for respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

CHIECHI, Judge: This case arises from (1) a request for

relief under section 6015(b)1 and, in the alternative, under

section 6015(f) with respect to each of petitioner’s taxable
- 2 -

years 1989, 1991, 1992, and 1993 and (2) a request for relief

under section 6015(f) with respect to petitioner’s taxable year

1990. 

The issues for decision are:

(1) Is petitioner entitled to relief under section 6015(b)

with respect to each of the taxable years 1989, 1991, 1992, and

1993? We hold that petitioner is not entitled to such relief.

(2) Did respondent abuse respondent’s discretion in denying

petitioner relief under section 6015(f) with respect to each of

the taxable years 1989, 1990, 1991, 1992, and 1993? We hold that

respondent did not abuse respondent’s discretion.

FINDINGS OF FACT

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

At the time petitioner filed the petition, she resided in

Jeanette, Pennsylvania.

Petitioner received three degrees from the University of

Pittsburgh: (1) An undergraduate nursing degree in 1976; (2) a

graduate nursing degree in 1980; and (3) a law degree in 1990.

From 1976 until 1990, petitioner worked at Monsour Medical

Center, initially as a registered nurse in the critical care unit

and thereafter as the director of nursing.

In 1991, petitioner was admitted to practice law in Pennsylvania and began to do so as a sole practitioner focusing on

family law and the respective laws relating to personal injury
- 3 -

claims and Social Security claims for disability. In 1992,

petitioner was admitted to practice law in Florida, although she

limited her law practice almost exclusively to Pennsylvania.

On July 3, 1983, petitioner, who was approximately 29 years

old, married William J. Monsour (Mr. Monsour), who was approximately 55 years old. At that time, Mr. Monsour was a successful

physician specializing in internal medicine at Monsour Medical

Center as well as a successful investor who, either alone or with

other persons excluding petitioner, had invested in various

assets. (We shall refer to the assets in which Mr. Monsour,

either alone or with others excluding petitioner, had invested as

Mr. Monsour’s assets or Mr. Monsour’s investments.) 

Throughout the taxable years at issue, at least certain

household bills relating to the residence of petitioner and Mr.

Monsour were sent to Mr. Monsour’s office. Mr. Monsour took any

such bills to that residence, where petitioner reviewed them,

prepared checks to pay them, asked Mr. Monsour to sign those

checks, and mailed those signed checks to the payees. At all

relevant times, Mr. Monsour also signed checks with respect to

Mr. Monsour’s investments as well as checks with respect to the

joint investments of petitioner and Mr. Monsour. Petitioner

reviewed those signed checks and mailed them to the payees.

Before their marriage, petitioner and Mr. Monsour entered

into a prenuptial agreement (prenuptial agreement), which listed
- 4 -

all of Mr. Monsour’s assets. That agreement provided that

petitioner was to receive (1) 10 percent of Mr. Monsour’s assets

in the event that she and he were to divorce prior to a stated

time not disclosed by the record and (2) a percentage of Mr.

Monsour’s assets not disclosed by the record in excess of 10

percent if she and he were to remain married after such stated

time and were to have children. Petitioner and Mr. Monsour had

three children for whose care she was principally responsible

during the taxable years at issue.

Mr. Monsour’s assets listed in the prenuptial agreement and

Mr. Monsour’s assets that he acquired either alone or with others

excluding petitioner after he married her included the following

assets acquired in the years indicated.

In 1971, Mr. Monsour bought a house situated on 68 acres of

land known as Open Heart located in the mountains in Fairfield

Township, Pennsylvania (Open Heart property).

In 1973, Mr. Monsour and his three brothers, Robert Monsour,

Roy Monsour, and Howard Monsour (collectively, Mr. Monsour’s

brothers), formed a partnership known as Monsour Gator Groves

(Monsour Gator Groves), which invested in a 290-acre orange grove

located near Sarasota, Florida (Sarasota). In 1989, they sold

that partnership.

In 1974, Mr. Monsour and Mr. Monsour’s brothers formed a

partnership known as Laurel Valley Farms, which invested in
- 5 -

2The record refers to the shopping center located in

Sarasota as both Georgetown Square and Georgetowne Square. For

convenience, we shall refer to that shopping center as Georgetown

Square.

The record refers to the following three corporations with

the words “Georgetown Square” in their names in which Mr. Monsour

or petitioner and Mr. Monsour owned stock: Georgetown Square,

Ltd., Georgetown Square Assoc., Inc., and Georgetown Square

Assoc., Ltd. The record is not clear as to which of those

corporations owned the Georgetown Square shopping center.

cattle situated on farmland located in Pennsylvania.

In 1979, Mr. Monsour purchased several condominiums with

ocean views in a condominium hotel known as the Three Crowns

Hotel located in Sarasota.

At a time not disclosed by the record after Mr. Monsour

invested in the Three Crowns Hotel in 1979 and before July 3,

1983, he purchased 40 percent of the stock of a corporation known

as Azure Tides, Inc., which owned a hotel (Azure Tides Hotel)

located adjacent to the Three Crowns Hotel.

At a time not disclosed by the record after Mr. Monsour

invested in Azure Tides, Inc., and before July 3, 1983, he

purchased 33-1/3 percent of the stock of a corporation which

owned a shopping center known as Georgetown Square2 located in

Sarasota.

At a time not disclosed by the record before July 3, 1983,

Mr. Monsour invested in the Three Crowns Hotel Back Court, a twostory motel located behind the Three Crowns Hotel.

Around 1980, Mr. Monsour and a radiologist formed a corpora-
- 6 -

tion known as Scanner Corporation, which invested in a CT Scan

machine.

At a time not disclosed by the record before July 3, 1983,

Mr. Monsour and a Mr. Seltzer invested in an apartment (Beach

Road apartment) located at 450 Beach Road in Sarasota. At a time

not disclosed by the record, Mr. Seltzer became ill, and two of

Mr. Monsour’s brothers, Robert Monsour and Roy Monsour, purchased

Mr. Seltzer’s interest in that apartment.

At a time not disclosed by the record before July 3, 1983,

Mr. Monsour and Mr. Seltzer invested in an apartment (Lido Beach

apartment) located at 703 Lido Beach in Sarasota. At a time not

disclosed by the record, Mr. Seltzer became ill, and Mr. Monsour

purchased Mr. Seltzer’s interest in that apartment. 

Around 1988, Mr. Monsour and Mr. Monsour’s brothers invested

in a medical supply company known as American Supply.

At a time not disclosed by the record, Mr. Monsour invested

in a mutual fund known as MFS Lifetime.

At a time not disclosed by the record after July 3, 1983,

petitioner and Mr. Monsour jointly invested in (1) eight townhouses (Irwin rental townhouses) located in Irwin, Pennsylvania,

which they intended to, and did, rent and (2) unit 201 of the

Azure Tides Hotel.

From around 1973 through around 1993, Mr. Monsour traveled

each month (monthly trip) from Pennsylvania to the Sarasota area
- 7 -

in order to check on Mr. Monsour’s investments in the Sarasota

area (Mr. Monsour’s Florida investments) which, as discussed

above, included Monsour Gator Groves, the Three Crowns Hotel,

Azure Tides, Inc., Georgetown Square, the Three Crowns Hotel Back

Court, the Beach Road apartment, and the Lido Beach apartment.

With respect to each such monthly trip, Mr. Monsour usually left

on a Wednesday evening and returned on the following Monday

morning. At all relevant times, including throughout the taxable

years at issue, petitioner knew about Mr. Monsour’s monthly

trips. Sometimes petitioner traveled with Mr. Monsour on those

trips, although she was not involved in checking on Mr. Monsour’s

Florida investments.

From the time of their marriage on July 3, 1983, until 1986,

petitioner and Mr. Monsour did not worry about money and did not

scrutinize their discretionary spending to any significant

extent. Starting in 1986 and continuing throughout the taxable

years at issue, Mr. Monsour began to experience certain Federal

income tax (tax) problems and certain other nontax problems

(discussed below) with at least certain of Mr. Monsour’s Florida

investments. As a result, petitioner and Mr. Monsour began to

scrutinize their discretionary spending much more than they had

in the past. At all relevant times, petitioner knew that Mr.

Monsour spent a large amount of money on Mr. Monsour’s Florida

investments and believed that that amount was extravagant. At a
- 8 -

time not disclosed by the record after 1986, petitioner questioned Mr. Monsour about whether Mr. Monsour’s Florida investments were worthwhile, to which he responded that they were. 

Except for having informed petitioner that he thought his Florida

investments were worthwhile, Mr. Monsour did not discuss with

petitioner any of the nontax business aspects of Mr. Monsour’s

investments.

In 1986, Mr. Monsour began to experience tax problems when

Congress enacted certain provisions into the Code that in general

eliminated the favorable tax treatment that the Code had previously permitted with respect to at least certain of Mr. Monsour’s

Florida investments. Starting in 1986, Mr. Monsour also began to

experience certain nontax problems with at least certain of those

investments, including those discussed below.

At a time not disclosed by the record, Highlander Properties

Enterprises, Inc. (Highlander Properties Enterprises), commenced

an action in the Circuit Court of the Twelfth Judicial Circuit in

and for Sarasota County, Florida (Florida Circuit Court) against,

among others, petitioner and Mr. Monsour (Florida Circuit Court

action). As a result of that action, on July 12, 1993, units 1,

2, 4, 5, 6, 201, 202, 203, 204, 205, 401, 402, 403, 404, and 405

of the Three Crowns Hotel were sold to Highlander Properties

Enterprises in a foreclosure sale. Thereafter, on a date not

disclosed by the record in 1994, petitioner and Mr. Monsour
- 9 -

3The record establishes that Mr. Monsour made certain other

transfers to petitioner but does not establish which of Mr.

Monsour’s assets were included in those transfers. The record

does not establish whether Mr. Monsour made any additional

transfers of Mr. Monsour’s assets to petitioner.

signed a quitclaim deed by which they transferred to Highlander

Property Enterprises units 3 and 7 of the Three Crowns Hotel,

which had not been the subject of the Florida Circuit Court

action.

At a time not disclosed by the record, Mr. Monsour and other

stockholders of Azure Tides, Inc., were forced to sell that

corporation to a hotel chain.

On March 2, 1988, petitioner and Mr. Monsour signed a

continuing guaranty with respect to Georgetown Square, Ltd.,

which provided that they jointly and severally guaranteed the

payment of any and all obligations and indebtedness of Georgetown

Square, Ltd., pertaining to a $500,000 mortgage.

At a time not disclosed by the record, the mortgage on the

Three Crowns Hotel Back Court was foreclosed.

Starting around 1989, pursuant to the prenuptial agreement,

petitioner asked Mr. Monsour to make her the joint owner of at

least certain of Mr. Monsour’s assets, and Mr. Monsour agreed to

do so. As discussed below, pursuant to petitioner’s request, Mr.

Monsour made certain transfers of Mr. Monsour’s assets to petitioner (Mr. Monsour’s transfers).3 

In 1989, Mr. Monsour transferred to petitioner one-half of
- 10 -

his interest in the residence of petitioner and Mr. Monsour.

In 1991, Mr. Monsour transferred to petitioner one-half of

his interest in the Open Heart property.

In 1997, Mr. Monsour transferred to petitioner one-half of

his interest in 30 acres of land, which at all relevant times he

and one of his brothers (Howard Monsour) owned and which was

located behind Monsour Medical Center, a hospital that Mr.

Monsour had owned and operated at all relevant times since 1964. 

In 1997, Mr. Monsour transferred to petitioner one-half of

his interest in Laurel Valley Farms.

At a time not disclosed by the record, petitioner and Mr.

Monsour jointly filed Form 1040, U.S. Individual Income Tax

Return (Form 1040), for each of their taxable years 1987 and

1988.

On March 19, 1993, respondent issued to petitioner and Mr.

Monsour a notice of deficiency (notice) with respect to their

taxable years 1987 and 1988 (notice for the taxable years 1987

and 1988). In that notice, respondent determined the following

deficiencies in, and additions to, the tax of petitioner and Mr.

Monsour:

 Additions to Tax 

Year Deficiency

Sec.

6653(a)(1)

Sec.

6653(a)(1)(A)

Sec.

6653(a)(1)(B)

Sec.

6661

1987 $15,851 -- $1,066 1 $5,332

1988 21,416 $1,627 -- -- 8,133

150% of the interest due on the deficiency.
- 11 -

Attached to the notice for the taxable years 1987 and 1988 was,

inter alia, Form 886-A, EXPLANATION OF ITEMS (Form 886-A), which

provided in pertinent part as follows:

INTEREST INCOME - MONSOUR FAMILY INVESTMENTS

It is determined that you understated your taxable

interest income received from Monsour Family Investments by $12,334.00 and $10,014.00 for the years ending

December 31, 1987 and December 31, 1988, respectively. 

Therefore, your taxable income is increased $12,334.00

for 1987 and $10,014.00 for 1988.

LOSS - 3 CROWNS HOTEL

Expenses incurred in connection with 3 Crowns

Hotel were not for an activity entered into for profit. 

Therefore, the $126,632.00 shown on your return for

1987 and the $136,461.00 shown on your return for 1988

as deductions are not allowable under Section 183 of

the Internal Revenue Code and your taxable income is

increased accordingly.

TAXES - SCHEDULE A

INTEREST EXPENSE - SCHEDULE A

The taxes and interest expense deducted on Schedule C for 3 Crowns Hotel are allowable as itemized

deductions on Schedule A. Your taxable income for 1987

is, therefore, decreased by $13,319.00 for taxes and

$65,624.00 for interest. Your taxable income for 1988

is decreased by $12,791 for taxes and by $55,328.00 for

interest.

PREVIOUSLY AGREED ADJUSTMENTS

You signed an agreement on April 8, 1992 consenting to the following adjustments:
- 12 -

 1987 1988

3 Crowns Motel $10,681 $ 3,171

Interest & Dividend Income 3,622 8,523

Sched. C Deductions - 8,334

 Medical Consultant

Sched. C Deductions - 6,109 1,200

 Medical Technician

Partnership Income & Losses 33,461 87,397

Sched. C Depreciation - 2,688

 Azure Tides Hotel

Capital Gains & Losses 3,000 11,209

Itemized Deductions -28,634 28,634

 $30,573 [1]$142,822

1Form 886-A erroneously showed the total of the adjustments for 1988 to

which petitioner and Mr. Monsour had previously agreed as $142,802.

On June 17, 1993, petitioner and Mr. Monsour filed a 

petition (petition for the taxable years 1987 and 1988) in the

Court with respect to the notice for the taxable years 1987 and

1988. (We shall refer to the case that petitioner and Mr.

Monsour commenced when they filed the petition for the taxable

years 1987 and 1988 as the case for the taxable years 1987 and

1988.) In that petition, petitioner and Mr. Monsour alleged,

inter alia, that respondent erred in failing to determine that

petitioner is entitled to relief under section 6013(e).

William F. Winschel (Mr. Winschel) represented petitioner

and Mr. Monsour in the case for the taxable years 1987 and 1988.

Edward J. Laubach, Jr. (Mr. Laubach), represented respondent in

that case.

On November 1, 1994, pursuant to the agreement of the

parties, the Court entered a decision in the case for the taxable

years 1987 and 1988 (stipulated decision in the case for the
- 13 -

4Petitioner and Mr. Monsour filed a joint tax return (joint

return) for each of their taxable years 1989, 1990, 1991, 1992,

and 1993 on the dates indicated:

taxable years 1987 and 1988). That decision provided in pertinent part as follows:

Pursuant to agreement of the parties in this case,

it is

ORDERED and DECIDED: That there are deficiencies

in income tax due from the petitioners for the taxable

years 1987 and 1988 in the amounts of $3,827 and

$10,463, respectively;

That there is an addition to the tax due from the

petitioners under the provisions of I.R.C. § 6661 for

the taxable years 1987 and 1988 in the amounts of $930

and $2,158, respectively; and 

That there are no additions to the tax due from

the petitioners under the provisions of I.R.C. §§

6653(a)(1)(A), 6653(a)(1)(B) and 6653(a)(1) for the

taxable years 1987 and 1988.

Joseph N. Iezzi (Mr. Iezzi), a certified public accountant,

prepared Form 1040 that petitioner and Mr. Monsour signed and

jointly filed for each of their taxable years 1989 (1989 joint

return), 1990 (original 1990 joint return), 1991 (1991 joint

return), 1992 (1992 joint return), and 1993 (1993 joint return).4
- 14 -

Joint Return Date Filed

1989 joint

return

Apr. 28, 1992

Original 1990

joint return

Oct. 18, 1991

1991 joint

return

Oct. 20, 1992

1992 joint

return

Dec. 27, 1993

1993 joint

return

Oct. 25, 1994

Mr. Iezzi also prepared two Forms 1040X, Amended U.S. Individual

Income Tax Return, that petitioner and Mr. Monsour signed and

jointly filed for their taxable year 1990 (first 1990 amended

joint return and second 1990 amended joint return, respectively).

The joint returns for the taxable years at issue showed the

following:
- 15 -

1989 

Joint

Return

Original

1990 Joint

Return

1991 

Joint

Return

1992 

Joint

Return

1993 

Joint

Return

Wages,

salaries, tips,

etc.

$260,128 $267,160 $153,375 $105,990 $94,594

Taxable

interest income

 151,395 71,777 17,679 3,830 1,184

Dividend income 552 435 645 -- -– 

Business income

or (loss) from

Schedule C

 (187,336) (177,287) (165,526) (27,912) (24,275)

Capital gain

distributions

 7 -- --

 -- -- 

Taxable IRA

distributions

 -- -- -- 23,968 21,090

Taxable

pensions and

annuities

 2,000 1,189 0 -- 20,898

Rents,

royalties,

partnerships,

estates,

trusts, etc.,

from Schedule E

 (334,910) 193,578 40,882 (58,533) (156,563)

Other income 255 253 -- -- 42,100

Total income -- 357,105 47,055 44,343 (972)

Total tax -- 36,370 0 1,650 350

Total payments

of tax

 3,134 1,657 0 445 76

Amount of tax

due

 --

 134,713 0  21,255  3274

1When petitioner and Mr. Monsour filed their original 1990 joint return,

they did not pay the amount of tax shown due in that return.

2When petitioner and Mr. Monsour filed their 1992 joint return, they paid

the $1,255 of tax shown due in that return. 

3When petitioner and Mr. Monsour filed their 1993 joint return, they paid

the $274 of tax shown due in that return. 

Schedule C, Profit or Loss From Business (Schedule C),

included as part of each of the joint returns for the taxable

years at issue showed the following net profit or (loss) with

respect to the following businesses:
- 16 -

Schedule C

Relating to

1989

Joint

Return

Original

1990 Joint

Return

1991

Joint

Return

1992

Joint

Return

1993 

Joint

Return

Three Crowns

Hotel

($99,414) ($98,176) ($91,122) –- –- 

Azure Tides Hotel (16,803) (5,899) (24,927) ($17,817) ($15,749)

Three Crowns

Hotel Back Court

(73,219) (73,212) (41,975) –- –-

1 Linden Drive 2,100 –- –- –- –-

Petitioner’s law

practice

 –- –- (7,502) (10,095) (8,526)

Schedules C relating to the Three Crowns Hotel included as

part of the 1989 joint return and as part of the original 1990

joint return identified petitioner and Mr. Monsour as proprietors. Schedule C relating to that hotel included as part of the

1991 joint return identified Mr. Monsour as the proprietor.

Schedule C relating to the Azure Tides Hotel included as

part of each of the joint returns for the taxable years at issue

identified Mr. Monsour as the proprietor.

Schedules C relating to the Three Crowns Hotel Back Court

included as part of the 1989 joint return and as part of the

original 1990 joint return identified petitioner and Mr. Monsour

as proprietors. Schedule C relating to that motel included as

part of the 1991 joint return identified Mr. Monsour as the

proprietor.

Schedule C relating to 1 Linden Drive included as part of

the 1989 joint return identified petitioner as the proprietor and

showed “Medical Technician” as the principal business or profession. The net profit shown in that Schedule C resulted from

petitioner’s having performed certain bookkeeping tasks for
- 17 -

Scanner Corporation in 1989, for which she was compensated a few

hundred dollars per month.

Schedule E, Supplemental Income and Loss (Schedule E),

included as part of each of the joint returns for the taxable

years at issue showed, inter alia, the following income or

(losses) with respect to the following rentals:

Schedule E

Relating to

1989

Joint

Return

Original

1990 Joint

Return

1991

Joint

Return

1992

Joint

Return

1993 

Joint

Return

Lido Beach

Apartment

($7,041) ($931) ($3,755) ($3,644) ($1,757)

Irwin Rental

Townhouses

 (5,494) (642) (3,522) (3,902) 8,032

Beach Road

Apartment

 (3,844) (267) –- –- –-

Island House in

Sarasota

 –- –- (19,621) (36,827) (31,275)

Schedule E included as part of each of the joint returns for

the taxable years at issue showed, inter alia, the following

income or (loss) with respect to the following partnerships and S

corporations:
- 18 -

5As discussed above, when petitioner and Mr. Monsour filed

their original 1990 joint return, they did not pay the amount of

tax shown due in that return.

Schedule E

Relating to

1989 

Joint

Return

Original

1990 Joint

Return

1991

Joint

Return

1992

Joint

Return

1993

Joint

Return

Monsour Gator

Groves

($10,579) –- –- –- –-

Laurel Valley

Farms

 (81,380) ($40,300) ($25,611) ($33,533) ($12,134)

Azure Tides, Inc. (210,727) 1–- (7) (58,156) (119,429)

Georgetown

Square, Ltd.

2(119,748) (23,518) –- –- –-

Georgetown Square

Assoc., Inc.

 (73) (18) –- –- –-

Georgetown Square

Assoc., Ltd.

 (7,245) –- –- –- –-

Scanner

Corporation

 111,221 259,254 93,398 72,451 –-

1The joint return did not show any amount because, as discussed below,

petitioner and Mr. Monsour did not receive Schedule K-1, Shareholder’s Share

of Income, Credits, Deductions, Etc. (Schedule K-1), relating to Azure Tides,

Inc., until after they filed the original 1990 joint return.

2Of the $119,748 total loss reported, $112,583 was reported as a passive

loss and $7,165 was reported as a nonpassive loss.

Petitioner did not examine in detail the 1989 joint return,

the original 1990 joint return, the 1991 joint return, the 1992

joint return, and the 1993 joint return before she signed each

such return. Nonetheless, in signing each of those returns, she

was aware, inter alia, (1) that such returns claimed substantial

losses in Schedules C ranging from $24,275 to $187,336 and in

Schedules E ranging from $58,533 to $334,910, (2) that such

claimed losses reduced income reported in such returns, and 

(3) that there were (a) no tax shown due in the 1989 joint return

or the 1991 joint return, (b) tax shown due of $34,713 in the

original 1990 joint return,5 (c) tax shown due of $1,255 in the
- 19 -

6Petitioner and Mr. Monsour reported in the original 1990

joint return a credit of $41,785.

7In the original 1990 joint return, petitioner and Mr.

Monsour showed tax due of $34,713. Although there were net

decreases shown in the first 1990 amended return in the respective amounts of total income and taxable income reported in the

original 1990 joint return, that amended return showed an increase in the tax due shown in that original return because

petitioner and Mr. Monsour claimed (1) a credit of $41,785 in the

original 1990 joint return and (2) a credit of $1,323 in the

first 1990 amended joint return.

1992 joint return, and (d) tax shown due of $274 in the 1993

joint return. In signing each of the joint returns for the

taxable years at issue, petitioner did not raise any questions

with Mr. Monsour or Mr. Iezzi regarding any of those returns. 

Before petitioner signed each of the joint returns for the taxable years at issue, she read the jurat clause that appeared

above the signature lines in each such return.

In their first 1990 amended joint return, petitioner and Mr.

Monsour showed total income as originally reported of $357,105,

taxable income as originally reported of $270,922, tax as originally reported of $78,155, credits as adjusted of $1,323,6 and

total tax liability as adjusted of $76,832. In that amended

return, petitioner and Mr. Monsour showed a net decrease in total

income of $101,287, correct total income of $255,818, correct

taxable income of $169,635, correct tax of $47,841, correct total

tax liability of $46,518, and tax due of $44,861.7 Part II,

Explanation of Changes to Income, Deductions, and Credits (Part
- 20 -

8The 1990 Azure Tides, Inc., Schedule K-1 is the only Schedule K-1 that is part of the record in the instant case. 

II of Form 1040X), of the first 1990 amended joint return provided in pertinent part as follows:

Line 8a - Interest income from K1 (1120S) - K1 from

Azure Tides, Inc. was not received until 11-22-91 [after petitioner and Mr. Monsour filed their original

1990 joint return]

Sch. E - Part II - Nonpassive loss from K1 (1120S) - K1

from Azure Tides, Inc. was not received until 11-22-91

(Copy of K1 attached).

Schedule K-1, Shareholder’s Share of Income, Credits,

Deductions, Etc., relating to Azure Tides, Inc., included as part

of the first 1990 amended joint return (1990 Azure Tides, Inc.,

Schedule K-1)8 identified Mr. Monsour as the shareholder and

showed an ordinary loss from trade or business activities of

$101,805 and portfolio interest income of $518.

In their second 1990 amended joint return, petitioner and

Mr. Monsour showed total adjusted gross income as adjusted of

$255,818, taxable income as adjusted of $169,635, tax as adjusted

of $47,841, credits as adjusted of $1,323, and total tax liability as adjusted of $46,518. In that amended return, petitioner

and Mr. Monsour showed a net increase in adjustments to income of

$91,920, correct total adjusted gross income of $163,898, correct

taxable income of $77,715, correct tax of $17,542, correct credits of $0, correct total tax liability of $29,048, and tax due of

$27,391. Part II of Form 1040X of the second 1990 amended joint
- 21 -

9The notice for the taxable years at issue is not part of

the record in the instant case. The record does not establish

whether respondent made determinations in that notice relating to

any matters other than those discussed herein. 

return provided in pertinent part as follows:

Line 2, Adjustments to Income:

Expenses in the amount of $91,920.00 are claimed in

connection with legal fees and custodian fees paid for

the purpose of protecting and preserving existing business assets, business income, professional reputation

and professional employment.

At a time not disclosed by the record before July 6, 1995,

respondent initiated an examination of the respective joint

returns for the taxable years at issue (examination of the taxable years at issue). On July 6, 1995, petitioner and Mr.

Monsour executed Form 2848, Power of Attorney and Declaration of

Representative, in which they appointed Mr. Winschel as their

attorney-in-fact with respect to that examination.

At a time not disclosed by the record after the examination

of the taxable years at issue began, respondent’s Appeals Office

(Appeals Office) began consideration of those years. Mr.

Winschel continued to represent petitioner and Mr. Monsour at the

Appeals Office.

At a time not disclosed by the record before December 16,

1997, respondent issued to petitioner and Mr. Monsour a notice

with respect to the taxable years at issue (notice for the taxable years at issue).9 In that notice, respondent made determinations for one or more of the taxable years 1989, 1991, 1992, and
- 22 -

10The record does not establish the respective amounts of

respondent’s determinations of erroneous deductions with respect

to Laurel Valley Farms, the Three Crowns Hotel, Azure Tides,

Inc., Georgetown Square, and the Three Crowns Hotel Back Court. 

Nor does the record establish to which of the taxable years 1989,

1991, 1992, and 1993 those determinations pertain. 

11The record does not establish the respective amounts of

respondent’s determinations of omitted income with respect to

Georgetown Square, Monsour Medical Center, the joint bank accounts of petitioner and Mr. Monsour, petitioner’s separate bank

account, and petitioner’s law practice bank account, although, as

discussed below, the record shows that respondent made a determination of omitted income relating to petitioner’s law practice

bank account in an amount between $8,000 and $10,000. Nor does

the record establish to which of the taxable years 1989, 1991,

1992, and 1993 those determinations pertain, although, as discussed below, the record shows that respondent made a determination of omitted income relating to petitioner’s law practice bank

account for two of the three taxable years 1991, 1992, and 1993.

1993 of erroneous deductions with respect to Laurel Valley Farms,

the Three Crowns Hotel, Azure Tides, Inc., Georgetown Square, and

the Three Crowns Hotel Back Court.10 In the notice for the taxable years at issue, respondent also made determinations for one

or more of the taxable years 1989, 1991, 1992, and 1993 of 

(1) omitted income with respect to Georgetown Square, (2) omitted

interest income with respect to Monsour Medical Center, and 

(3) omitted income relating to unexplained deposits into (a) the

joint bank accounts of petitioner and Mr. Monsour, (b) a separate

bank account of petitioner (petitioner’s separate bank account),

and (c) a bank account that petitioner maintained with respect to

her law practice (petitioner’s law practice bank account).11 In

that notice, respondent also made determinations for one or more
- 23 -

12The record does not establish the nature and the respective amounts of respondent’s determinations with respect to

American Supply and MFS Lifetime. Nor does the record establish

to which of the taxable years 1989, 1991, 1992, and 1993 those

determinations pertain. 

of the taxable years 1989, 1991, 1992, and 1993 with respect to

American Supply and MFS Lifetime.12

On December 16, 1997, petitioner and Mr. Monsour filed a

petition (petition for the taxable years at issue) in the Court

with respect to the notice for the taxable years at issue. (We

shall refer to the case that petitioner and Mr. Monsour commenced

when they filed the petition for the taxable years at issue as

the case for the taxable years at issue.) In that petition,

petitioner and Mr. Monsour did not make a claim that petitioner

is entitled to relief under section 6013(e) with respect to any

of the taxable years at issue. At no time while the case for the

taxable years at issue was pending in the Court, including during

the period July 22 to October 8, 1998, the date on which, pursuant to the agreement of the parties, the Court entered a decision

for the taxable years at issue (discussed below), did petitioner

make a claim that she is entitled to relief from joint and several liability with respect to any of those taxable years.

Mr. Winschel represented petitioner and Mr. Monsour in the

case for the taxable years at issue. Mr. Laubach represented

respondent in that case.

At a time not disclosed by the record before June 8, 1998,
- 24 -

13The record does not disclose how many times Mr. Monsour

met in person with Mr. Winschel to discuss the case for the

taxable years at issue or how many times, if any, they discussed

that case over the telephone and/or in written correspondence or

electronic mail. 

Mr. Laubach issued a subpoena to Monsour Medical Center in order

to determine whether there was any omitted interest income with

respect to that entity. On June 8, 1998, Hugh E. Teitelbaum (Mr.

Teitelbaum), legal counsel for Monsour Medical Center, responded

to that subpoena and sent a copy of his response to petitioner. 

Mr. Monsour met with Mr. Winschel several times to discuss

the issues in the case for the taxable years at issue.13 Two of

those meetings were dinner meetings (dinner meetings) that took

place at the residence of petitioner and Mr. Monsour. Petitioner

was present at those dinner meetings.

Petitioner knew that for two of the three taxable years

1991, 1992, and 1993 respondent made a determination of omitted

income relating to petitioner’s law practice bank account in an

amount between $8,000 and $10,000. (We shall refer collectively

to those two determinations as determinations relating to petitioner’s law practice bank account.) At petitioner’s request,

Mr. Winschel conceded the determinations relating to petitioner’s

law practice bank account. 

Mr. Laubach met with Mr. Winschel several times to discuss

settling the case for the taxable years at issue. Mr. Laubach

spent a lot of time in an attempt to reach a settlement of that
- 25 -

14The record does not establish whether respondent conceded

in full and/or compromised in part any of the other determinations in the notice for the taxable years at issue. 

case. That was because the issues were factually intensive and

required Mr. Laubach to ask Mr. Winschel to provide him with

certain documents that Mr. Winschel claimed supported the positions of petitioner and Mr. Monsour with respect to the case for

the taxable years at issue. Based upon certain documentation

that Mr. Winschel provided to Mr. Laubach, respondent conceded

respondent’s determination of omitted income with respect to

Georgetown Square for one or more of the taxable years 1989,

1991, 1992, and 1993 not disclosed by the record.14

On October 8, 1998, pursuant to the agreement of the parties, the Court entered a decision in the case for the taxable

years at issue (stipulated decision in the case for the taxable

years at issue). That decision provided as follows:

Pursuant to agreement of the parties in this case,

it is

ORDERED and DECIDED: That there are deficiencies

in income tax due from the petitioners for the taxable

years 1989, 1991, 1992, and 1993 in the amounts of

$31,349, $8,943, $9,773, and $28,578, respectively.

That the following statement shows the petitioners’ income tax liability for the taxable year 1990:
- 26 -

Tax liability $73,524

Tax assessed:

Paid $50,853.78

 Not Paid 29,956.22

 80,810

Deficiency (to be assessed) None

That there are additions to the tax due from the

petitioners under the provisions of I.R.C. § 6651(a)(1)

for the taxable years 1989, 1992, and 1993 in the amounts of $7,172, $1,520, and $1,458, respectively.

That there are penalties due from the petitioners

under the provisions of I.R.C. § 6662(a) for the taxable years 1989, 1991, 1992, and 1993 in the amounts of

$2,165, $1,789, $426, and $3,923, respectively. 

That there are no additions to the tax due from

the petitioners under the provisions of I.R.C. 

§ 6651(a)(1) for the taxable years 1990 and 1991.

That there is no penalty due from the petitioners

under the provisions of I.R.C. § 6662(a) for the year

1990.

At a time not disclosed by the record, petitioner and Mr.

Monsour jointly filed Form 1040 for their taxable year 1998 (1998

joint return). At the time of the trial in this case in September 2003, petitioner and Mr. Monsour had an unpaid liability of

$60,000 with respect to their 1998 joint return. 

On February 12, 2001, petitioner filed with respondent Form

8857, Request for Innocent Spouse Relief (And Separation of

Liability and Equitable Relief), with respect to each of the

taxable years 1989, 1990, 1991, 1992, and 1993 (petitioner’s Form

8857). Petitioner attached the following statement to peti-
- 27 -

tioner’s Form 8857:

ATTACHMENT

The understatement in tax for the periods in question were due to investments and business activities of

my husband, [about] all of which I had no information

or knowledge.

During these periods I had employment and educational pursuits totally unrelated to my husband’s investment and business activities. All of the understatements in question were the results of an audit of

our tax return.

On September 12, 2002, in response to petitioner’s Form

8857, respondent issued to petitioner a notice of determination.

In that notice, respondent denied petitioner’s request for relief

under section 6015.

The liability for each of the taxable years 1989, 1991,

1992, and 1993 is from the assessment that respondent made for

each such year based upon the stipulated decision in the case for

the taxable years at issue. The liability for the taxable year

1990 is from the unpaid tax shown due in the original 1990 joint

return, plus interest thereon as provided by law, which respondent assessed, plus an additional assessment of $3,978 to which

petitioner and Mr. Monsour agreed after the examination of the

taxable years at issue began and before respondent issued the

notice for the taxable years at issue.

OPINION

Burden of Proof

The parties agree that petitioner bears the burden of prov-
- 28 -

15Petitioner argues, in the alternative, that respondent

should be precluded from relying on sec. 6015(g)(2) because

respondent did not raise that provision in respondent’s pleadings. We reject petitioner’s alternative argument regarding sec.

6015(g)(2). Although respondent did not raise that section in

respondent’s pleadings, respondent argued in the pretrial memorandum that respondent submitted to the Court that sec.

6015(g)(2) precluded petitioner from relief under sec. 6015, and

petitioner argued in the pretrial memorandum that petitioner

submitted to the Court that sec. 6015(g)(2) did not preclude

petitioner from relief under sec. 6015. Moreover, at trial, the

parties adduced evidence relating to petitioner’s participation

in the case for the taxable years at issue. On the record before

us, we find that the parties tried the issue under sec.

6015(g)(2) by consent and that that issue is treated in all

respects as having been raised in respondent’s pleadings. See

Rule 41(b)(1); see also Pierce v. Commissioner, T.C. Memo. 2003-

188.

ing that she is entitled to relief under section 6015(b) and (f). 

The parties have a disagreement over who bears the burden of

showing whether section 6015(g)(2) precludes petitioner from the

relief that she claims under section 6015. According to petitioner, respondent bears the burden of proof under section

6015(g)(2).15

Except where section 6015 provides otherwise, see sec.

6015(c)(3)(A)(ii), (c)(3)(C), (d)(3)(C), petitioner bears the

burden of proof under that section. See Rule 142(a); see also

Jonson v. Commissioner, 118 T.C. 106, 113 (2002), affd. 353 F.3d

1181 (10th Cir. 2003). Section 6015 does not provide that respondent bears the burden of proof under section 6015(g)(2). We

conclude that petitioner bears the burden of proof under that

section.
- 29 -

16Petitioner did not proffer into evidence certain documentary evidence (e.g., the notice for the taxable years at issue)

that is material to petitioner’s position in the instant case.

17The parties stipulated that the liability for the taxable

year 1990 is from the unpaid tax shown due in the original 1990

joint return, plus interest thereon as provided by law, which

respondent assessed, plus an additional assessment of $3,978 to

which petitioner and Mr. Monsour agreed after the examination of

the taxable years at issue began and before respondent issued the

notice for the taxable years at issue.

18Although the record shows that respondent made certain

determinations in the notice for the taxable years at issue with

respect to the taxable years 1989, 1991, 1992, and 1993, the

record does not establish whether those were the only determinations that respondent made in that notice. See supra note 9. 

Except for a determination of omitted income with respect to

(continued...)

Record in the Instant Case

In support of her position in the instant case, petitioner

relies principally on her own testimony and the testimony of Mr.

Monsour. We did not find the testimony of petitioner and Mr.

Monsour to be credible in certain material respects. We shall

not rely on any such testimony to support petitioner’s position

in the instant case. 

The testimony of petitioner and Mr. Monsour on which we are

willing to rely and the documentary evidence16 that petitioner

introduced into the record create a record that presents significant proof problems for petitioner. For example, the record does

not establish (1) the taxable year or years (i.e., 1989, 1991,

1992, and/or 1993)17 to which each of the determinations about

which we are aware18 pertains and (2) the portion, if any, of the
- 30 -

18(...continued)

Georgetown Square for one or more of those years not disclosed by

the record that respondent conceded, the record also does not

establish whether respondent conceded in full and/or compromised

in part in the case for the taxable years at issue any of the

determinations in that notice. See supra note 14.

19Petitioner claims relief under sec. 6015(b) and, in the

alternative, under sec. 6015(f) for each of the taxable years

1989, 1991, 1992, and 1993. She also claims relief under sec.

6015(f) for the taxable year 1990. Sec. 6015(b) uses, inter

alia, the term “understatement”, and sec. 6015(f) uses, inter

alia, the term “deficiency”. For purposes of this case, the

meaning of those terms is the same. See secs. 6211, 6015(b)(3). 

For convenience, we shall use the term “understatement”.

20See supra notes 10 through 12.

21Mr. Winschel represented petitioner and Mr. Monsour with

respect to, inter alia, respondent’s examination of the taxable

years at issue, the Appeals Office consideration of those years,

respondent’s issuance of the notice for those years, and the case

that petitioner and Mr. Monsour commenced in the Court for those

years.

deficiency or understatement19 for each of those years that is

attributable to each such determination.20

Although we believe that Mr. Winschel21 would have been able

to fill in most, if not all, of the significant gaps in the

record relating to the foregoing and certain other matters material to petitioner’s position in this case, petitioner did not

call him to testify on her behalf. We presume that petitioner

did not call Mr. Winschel as a witness because his testimony

would not have been favorable to petitioner’s position. See

Wichita Terminal Elevator Co. v. Commissioner, 6 T.C. 1158, 1165

(1946), affd. 162 F.2d 513 (10th Cir. 1947). 
- 31 -

22In addition to disputing whether petitioner participated

meaningfully in the case for the taxable years at issue, petitioner argues that “By its very language, Section 6015(g)(2) is

inapplicable to actions under Section 6015(f), being only applicable to ‘elections under subsections (b) and (c)’. See Section

6015(g)(2).” We reject petitioner’s argument. The Court has

held that sec. 6015(g)(2) applies to claims for relief under sec.

6015(b) and (c) as well as sec. 6015(f). Thurner v. Commissioner, 121 T.C. 43, 51-52 (2003). 

23Throughout petitioner’s briefs, petitioner relies on,

inter alia, final regulations issued under sec. 6015 that are

applicable for elections under sec. 6015(b) and (c) or requests

(continued...)

Section 6015(g)(2)

Section 6015(g)(2) provides:

SEC. 6015. RELIEF FROM JOINT AND SEVERAL LIABILITY ON 

 JOINT RETURN.

* * * * * * *

(g) Credits and Refunds.--

* * * * * * *

(2) Res judicata.--In the case of any election

under subsection (b) or (c), if a decision of a court

in any prior proceeding for the same taxable year has

become final, such decision shall be conclusive except

with respect to the qualification of the individual for

relief which was not an issue in such proceeding. The

exception contained in the preceding sentence shall not

apply if the court determines that the individual participated meaningfully in such prior proceeding.

The principal dispute between the parties under section

6015(g)(2) is whether petitioner participated meaningfully in the

case for the taxable years at issue.22 In support of petitioner’s

position that she did not participate meaningfully in that case,

she argues:23
- 32 -

23(...continued)

for relief under sec. 6015(f) that are filed on or after July 18,

2002. Sec. 1.6015-9, Income Tax Regs. Those final regulations

are not applicable in the instant case. That is because petitioner filed petitioner’s Form 8857 on Feb. 12, 2001. 

Petitioner and her husband were represented by

Attorney William Winschel in the * * * [case for the

taxable years at issue]. Petitioner’s husband was

involved in all meetings with the attorney * * * while

Petitioner was not involved at all. * * * Petitioner’s

husband did not discuss the case with her * * * and

ultimately had the case settled by Attorney Winschel. 

* * * Only two (2) minor items affected Petitioner

directly in that case, namely two (2) years of allegedly omitted attorney income, neither of which could

have resulted in any additional tax liability. 

* * * Accordingly, Petitioner’s participation could not

be meaningful in the * * * [case for the taxable years

at issue]. 

Respondent counters:

Petitioner argues that she was not personally

“involved” in the prior proceeding. * * * petitioner 

* * * told [Mr.] Winschel to concede an issue. She

also received information involved in the settlement. 

* * * Dr. Monsour testified that petitioner, Dr.

Monsour and attorney Winschel were present at several

dinner meetings at the Monsour home. The purpose of

the meetings was to discuss the Tax Court case. * * *

* * * * * * *

Furthermore, petitioner chose not to call [Mr.]

Winschel as a witness. * * * [Mr.] Winschel could have

testified as to petitioner’s participation in the prior

proceeding. From the failure to call [Mr.] Winschel to

testify it can only be inferred that [Mr.] Winschel’s

testimony, if given, would have been unfavorable to

petitioner. * * *

Although Mr. Winschel could have shed light on the extent of

petitioner’s participation in the case for the taxable years at

issue, as discussed above, petitioner chose not to call him to
- 33 -

24Petitioner and Mr. Monsour filed the petition for the

taxable years at issue on Dec. 16, 1997.

25In 1998, Congress repealed sec. 6013(e) and replaced it

with sec. 6015. Internal Revenue Service Restructuring and

Reform Act of 1998 (RRA 1998), Pub. L. 105-206, sec. 3201, 112

Stat. 734. Sec. 6015 applies to any liability for tax remaining

unpaid as of July 22, 1998. RRA 1998 sec. 3201(g)(1), 112 Stat.

740.

26Petitioner does not, and could not reasonably, claim that

she was unaware of provisions in the Code granting relief in

certain circumstances from joint and several liability. In the

petition for the taxable years 1987 and 1988, petitioner and Mr.

Monsour alleged, inter alia, that respondent erred in failing to

conclude that petitioner is entitled to relief under sec.

(continued...)

testify on her behalf, from which we have concluded that his

testimony would not have been favorable to her position. See

Wichita Terminal Elevator Co. v. Commissioner, supra. Instead,

petitioner relies on Mr. Monsour’s testimony to support her

contentions that Mr. Monsour, and not petitioner, was involved in

all of the meetings with Mr. Winschel with respect to the case

for the taxable years at issue and that Mr. Monsour did not

discuss that case with her. We did not find credible, and we

shall not rely on, Mr. Monsour’s testimony regarding who was

involved in the meetings with Mr. Winschel with respect to the

case for the taxable years at issue and whether Mr. Monsour

discussed that case with petitioner.

Petitioner did not claim in the petition24 for the taxable

years at issue that she was entitled to relief under section

6013(e)25 with respect to any of the taxable years at issue.26 Nor
- 34 -

26(...continued)

6013(e). The stipulated decision in the case for the taxable

years 1987 and 1988 did not grant petitioner relief under that

section. Moreover, petitioner and Mr. Monsour were represented

by Mr. Winschel in the case for the taxable years at issue, and

there is no suggestion in the record that there was any misunderstanding on the part of petitioner, Mr. Winschel, or Mr. Laubach,

respondent’s counsel in that case, which precluded petitioner

from raising a claim for relief from joint and several liability.

27On Oct. 8, 1998, the Court entered the stipulated decision

in the case for the taxable years at issue.

28The stipulated decision in the case for the taxable years

at issue showed that there was no addition to tax due from

petitioner and Mr. Monsour for the taxable year 1991. That

decision also showed $29,956.22 in unpaid tax due from petitioner

and Mr. Monsour for the taxable year 1990.

did petitioner make a claim at any other time while the case for

the taxable years at issue was pending in the Court, including

during the period July 22 to October 8, 1998,27 that she was

entitled to relief from joint and several liability with respect

to any of those years. Petitioner and Mr. Monsour agreed with

respondent that she was jointly and severally liable for deficiencies in, additions to, and penalties on tax that totaled

$40,686, $10,732, $11,719, and $33,959 for the taxable years

1989, 1991, 1992, and 1993, respectively, and that the Court

should enter a decision to that effect.28 Under such circumstances, it strains credulity that petitioner, an attorney, would

have agreed to the stipulated decision that the Court entered in

the case for the taxable years at issue without having meaningfully participated in discussions about that case with Mr.
- 35 -

29It is noteworthy that Mr. Teitelbaum, legal counsel for

Monsour Medical Center, sent to petitioner, and not to Mr.

Monsour and not even to Mr. Monsour and petitioner, a copy of his

response to the subpoena that respondent served on Monsour

Medical Center in the case for the taxable years at issue with

respect to a determination of omitted interest income that

respondent made in the notice for the taxable years at issue for

one or more of the taxable years 1989, 1991, 1992, and 1993 with

respect to that entity.

30The record does not establish, and petitioner does not

even allege, for which two of the three taxable years 1991, 1992,

and 1993 respondent made the determination of unreported income

relating to petitioner’s law practice bank account.

31In any event, we find that neither Mr. Laubach’s testimony

(continued...)

Winschel and/or Mr. Monsour or otherwise having meaningfully

participated in that case.29

Petitioner relies on Mr. Laubach’s testimony, the 1991 joint

return, the 1992 joint return, and the 1993 joint return to

support her contention that only “two (2) years of allegedly

omitted attorney income” directly affected petitioner in the case

for the taxable years at issue, viz., respondent’s determinations

in the notice that there was income relating to petitioner’s law

practice bank account that petitioner and Mr. Monsour did not

report in their joint returns for two of the three taxable years

1991, 1992, and 1993.30 Our resolution of the question whether

petitioner participated meaningfully in the case for the taxable

years at issue within the meaning of section 6015(g)(2) does not

depend on how many determinations in the notice for those years

“affected Petitioner directly”.31 Petitioner filed jointly with
- 36 -

31(...continued)

nor the joint returns for the taxable years 1991, 1992, and 1993

support petitioner’s contention that the determinations relating

to petitioner’s law practice bank account were the only determinations in the notice for the taxable years at issue that “affected Petitioner directly”. We have found that respondent made

determinations in that notice of omitted income relating to the

joint bank accounts of petitioner and Mr. Monsour and relating to

petitioner’s separate bank account. At a minimum, such determinations also “affected Petitioner directly”.

32See supra note 28.

Mr. Monsour a return for each of the taxable years at issue and

was jointly and severally liable for the tax shown due in each of

those returns and for any deficiency in, addition to, and penalty

on the tax for each of those years to which petitioner and Mr.

Monsour and respondent agreed and which the Court sustained in

the stipulated decision in the case for the taxable years at

issue.32

Based upon our examination of the entire record before us,

we find that petitioner has failed to carry her burden of establishing that she did not participate meaningfully in the case for

the taxable years at issue and that the stipulated decision in

that case, which did not grant petitioner relief from joint and

several liability, is not conclusive in the instant case. See

sec. 6015(g)(2). On that record, we hold that section 6015(g)(2)

precludes petitioner from the relief that she claims under section 6015(b) and (f). See Thurner v. Commissioner, 121 T.C. 43,

51-52 (2003).
- 37 -

33In the alternative, petitioner claims relief under sec.

6015(f) for each of the taxable years 1989, 1991, 1992, and 1993.

She also claims relief under that section for the taxable year

1990.

For the sake of completeness, we shall address whether,

assuming arguendo that we had not held that section 6015(g)(2)

precludes petitioner from the relief that she claims under section

6015(b) and (f), petitioner would be entitled to such relief. 

Section 6015(b)

Introduction

Petitioner claims that she is entitled to relief under

section 6015(b) for each of the taxable years 1989, 1991, 1992,

and 1993.33 Section 6015(b) provides:

SEC. 6015. RELIEF FROM JOINT AND SEVERAL LIABILITY ON 

 JOINT RETURN.

* * * * * * *

(b) Procedures For Relief From Liability Applicable

to All Joint Filers.--

(1) In general.–-Under procedures prescribed 

by the Secretary, if--

(A) a joint return has been made for a

taxable year;

(B) on such return there is an understatement of tax attributable to erroneous

items of 1 individual filing the joint return;

(C) the other individual filing the joint

return establishes that in signing the return

he or she did not know, and had no reason to

know, that there was such understatement;

(D) taking into account all the facts and
- 38 -

circumstances, it is inequitable to hold the

other individual liable for the deficiency in

tax for such taxable year attributable to such

understatement; and

(E) the other individual elects (in such

form as the Secretary may prescribe) the benefits of this subsection not later than the

date which is 2 years after the date the Secretary has begun collection activities with

respect to the individual making the election,

* * * 

 Section 6015(b)(1) is similar to section 6013(e)(1). We may

look at cases interpreting section 6013(e)(1) for guidance when

analyzing parallel provisions of section 6015. See Jonson v.

Commissioner, 118 T.C. at 119. The failure by a spouse requesting

relief (requesting spouse) under section 6015(b) to satisfy any of

the requirements of that section prevents such spouse for qualifying for such relief. Alt v. Commissioner, 119 T.C. 306, 313

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

The parties agree that petitioner satisfies section

6015(b)(1)(A) and (E). Petitioner contends, and respondent

disputes, that she satisfies section 6015(b)(1)(B), (C), and (D). 

Section 6015(b)(1)(B)

In order to satisfy section 6015(b)(1)(B), petitioner must

establish that there is an understatement of tax for each of the

taxable years 1989, 1991, 1992, and 1993 that is attributable to

erroneous items of Mr. Monsour. It is petitioner’s position that

The testimony of * * * [Mr. Monsour and Mr.

Laubach] delineated the issues before the Court that led

to the understatements [sic] for each year * * *. All
- 39 -

34See supra notes 9 through 12 and 18 and accompanying text.

35We have found that respondent conceded respondent’s determination of omitted income with respect to Georgetown Square for

one or more of the taxable years 1989, 1991, 1992, and 1993 not

disclosed by the record. In the notice for the taxable years at

issue, respondent also made a determination of an erroneous

deduction with respect to Georgetown Square for one or more of

the taxable years 1989, 1991, 1992, and 1993 not disclosed by the

record. Hereinafter, our references to the determination with

respect to Georgetown Square shall be to a determination of an

erroneous deduction for one or more of those years.

of those issues (except the minor issue involving Petitioner’s law office income adjustment) involved only

Petitioner’s husband. Clearly, all of the understatements could only be attributable to the husband’s activities, namely his investments or omissions from income,

since only he was involved in those activities.

Respondent counters that

a portion of the deficiencies for two years were from

unreported income from petitioner’s law practice and not

solely from Dr. Monsour. Also, for three years of

deficiencies, it is more likely than not that unreported

income reflected in deposits to joint accounts of petitioner and Dr. Monsour and single accounts in the name

of petitioner are part of the deficiencies. 

* * * [Moreover,] there is no evidence as to the

amount of an understatement of tax now due for a particular year as to a specific erroneous item of her husband. * * *

The determinations about which we are aware34 that respondent

made in the notice for the taxable years at issue relate to the

joint bank accounts of petitioner and Mr. Monsour, petitioner’s

separate bank account, petitioner’s law practice bank account,

Monsour Medical Center, Laurel Valley Farms, the Three Crowns

Hotel, Azure Tides, Inc., Georgetown Square,35 the Three Crowns
- 40 -

36See supra note 31.

Hotel Back Court, American Supply, and MFS Lifetime. As discussed

above, the record does not establish, inter alia, (1) the taxable

year or years (i.e., 1989, 1991, 1992, and/or 1993) to which each

of the determinations about which we are aware pertains and 

(2) the portion, if any, of the understatement for each of those

years that is attributable to each such determination. On the

record before us, we are unable to find whether or not each of

respondent’s determinations about which we are aware relates to an

erroneous item under section 6015(b)(1)(B) that gave rise to a

portion or all of an understatement for one or more of the taxable

years 1989, 1991, 1992, and 1993. 

Assuming arguendo that each of respondent’s determinations

about which we are aware had related to such an erroneous item, we

turn first to petitioner’s contention that the only such erroneous

items that involved her were with respect to petitioner’s law

practice bank account. We have found that, in addition to the

determinations relating to petitioner’s law practice bank account,

the determinations relating to the joint bank accounts of petitioner and Mr. Monsour and petitioner’s separate bank account

affected petitioner directly.36 On the record before us, we find

that petitioner has failed to establish that the determinations

with respect to petitioner’s law practice bank account, the joint

bank accounts of petitioner and Mr. Monsour, and petitioner’s
- 41 -

separate bank account related to erroneous items of Mr. Monsour

under section 6015(b)(1)(B). 

We turn now to petitioner’s contention that each of the

determinations relating to Monsour Medical Center, Laurel Valley

Farms, the Three Crowns Hotel, Azure Tides, Inc., Georgetown

Square, the Three Crowns Hotel Back Court, American Supply, and

MFS Lifetime did not involve her. Assuming arguendo that those

determinations had related to erroneous items of Mr. Monsour that

gave rise to a portion or all of an understatement for one or more

of the taxable years 1989, 1991, 1992, and 1993 (assumed erroneous

items of Mr. Monsour), on the record before us, we find that

petitioner has failed to establish (1) the taxable year or years

(i.e., 1989, 1991, 1992, and/or 1993) to which such assumed

erroneous items of Mr. Monsour pertain and (2) the portion of the

understatement for each of those years that is attributable to

such assumed erroneous items. We have found that petitioner has

failed to establish that the determinations relating to petitioner’s law practice bank account, the joint bank accounts of

petitioner and Mr. Monsour, and petitioner’s separate bank account

related to erroneous items of Mr. Monsour under section

6015(b)(1)(B). Consequently, those determinations may have

related to erroneous items of petitioner that gave rise to a

portion or all of an understatement for one or more of the taxable

years 1989, 1991, 1992, and 1993.
- 42 -

37Assuming arguendo that we had found that petitioner satisfied sec. 6015(b)(1)(B), on the record before us, we find for the

reasons set forth below in our consideration of petitioner’s

position with respect to sec. 6015(f) that petitioner has failed

to establish that she satisfies sec. 6015(b)(1)(C) and (D) for

any of the taxable years 1989, 1991, 1992, and 1993. 

Based upon our examination of the entire record before us, we

find that petitioner has failed to carry her burden of establishing that there is an understatement of tax for any of the taxable

years 1989, 1991, 1992, and 1993 that is attributable to erroneous

items of Mr. Monsour. On that record, we further find that

petitioner has failed to satisfy section 6015(b)(1)(B) for any of

those years.37

Conclusion

Based upon our examination of the entire record before us, we

find that petitioner has failed to carry her burden of establishing that she is entitled to relief under section 6015(b) for any

of the taxable years 1989, 1991, 1992, and 1993. 

Section 6015(f)

Petitioner claims, in the alternative, that she is entitled

to relief under section 6015(f) for each of the taxable years

1989, 1991, 1992, and 1993. She also claims that she is entitled

to relief under that section for the taxable year 1990. We review

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

discretion. Butler v. Commissioner, 114 T.C. 276, 292 (2000). 

Section 6015(f) provides:
- 43 -

38We note that Rev. Proc. 2003-61, 2003-32 I.R.B. 296 (Revenue Procedure 2003-61), superseded Revenue Procedure 2000-15. 

Revenue Procedure 2003-61 is effective for requests for relief

under sec. 6015(f) which were filed on or after Nov. 1, 2003, and

for requests for such relief which were pending on, and for which

(continued...)

SEC. 6015. RELIEF FROM JOINT AND SEVERAL LIABILITY ON 

 JOINT RETURN.

* * * * * * *

(f) Equitable Relief.–Under procedures prescribed

by the Secretary, if--

(1) taking into account all the facts and

circumstances, it is inequitable to hold the individual liable for any unpaid tax or any deficiency

(or any portion of either); and 

(2) relief is not available to such individual

under subsection (b) or (c), 

the Secretary may relieve such individual of such liability.

We have found that petitioner is not entitled to relief under

section 6015(b) for any of the taxable years 1989, 1991, 1992, and

1993. The parties agree that petitioner is not entitled to relief

under section 6015(b) for the unpaid liability relating to the

taxable year 1990. The parties also agree that petitioner is not

entitled to relief under section 6015(c) for any of the taxable

years at issue. We conclude that section 6015(f)(2) is satisfied

with respect to each of those years.

As directed by section 6015(f), respondent has prescribed

procedures in Revenue Procedure 2000-15, 2000-1 C.B. 447 (Revenue

Procedure 2000-15),38 that are to be used in determining whether it
- 44 -

38(...continued)

no preliminary determination letter had been issued as of, that

date. Id. sec. 7. Revenue Procedure 2003-61 is not applicable

in the instant case. That is because (1) petitioner filed

petitioner’s Form 8857 on Feb. 12, 2001, and (2) petitioner’s

Form 8857 was not pending on Nov. 1, 2003.

39The factors that we consider in determining whether it

would be inequitable for purposes of sec. 6015(f) are the same as

the factors that we consider in determining whether it would be

inequitable for purposes of sec. 6015(b)(1)(D). Alt v. Commissioner, 119 T.C. 306, 316 (2002), affd. 101 Fed. Appx. 34 (6th

Cir. 2004).

would be inequitable to find the requesting spouse liable for part

or all of the liability in question.39 Section 4.01 of Revenue

Procedure 2000-15 sets forth the following seven conditions

(threshold conditions) which must be satisfied before the IRS will

consider a request for relief under section 6015(f): 

(1) The requesting spouse filed a joint return for

the taxable year for which relief is sought;

(2) Relief is not available to the requesting

spouse under § 6015(b) or 6015(c);

(3) The requesting spouse applies for relief no

later than two years after the date of the Service’s

first collection activity after July 22, 1998, with

respect to the requesting spouse;

(4) * * * the liability remains unpaid * * *;

(5) No assets were transferred between the spouses

filing the joint return as part of a fraudulent scheme

by such spouses;

(6) There were no disqualified assets transferred

to the requesting spouse by the nonrequesting spouse. 

If there were disqualified assets transferred to the

requesting spouse by the nonrequesting spouse, relief

will be available only to the extent that the liability

exceeds the value of such disqualified assets. For this

purpose, the term “disqualified asset” has the meaning
- 45 -

given such term by § 6015(c)(4)(B); and

(7) The requesting spouse did not file the return

with fraudulent intent.

If a requesting spouse satisfies all of the applicable

threshold conditions, section 4.01 of Revenue Procedure 2000-15

provides that that spouse is entitled to relief under section

6015(f) for part or all of the liability in question if, taking

into account all of the facts and circumstances, the IRS determines that it would be inequitable to hold the requesting spouse

liable for such liability.

On brief, petitioner addresses only the threshold condition

set forth in section 4.01(6) of Revenue Procedure 2000-15. 

According to petitioner,

The only condition arguably not satisfied is item six in

regard to the property transfers made to Petitioner by

her husband. As the parties testified, however, those

transfers * * * were made pursuant to a prenuptial

agreement. * * *

The transfers in question would not be [made] with

“disqualified assets” as that term is defined in Section

6015(c)(4)(B) since the property transfers would have

occurred more than one (1) year before the deficiencies

were proposed. See Section 6015(c)(4)(B)(ii)(I). * * * 

The only threshold conditions that respondent argues petitioner does not satisfy are those set forth in section 4.01(5)

through (7) of Revenue Procedure 2000-15. According to respondent,

As to conditions 5 and 6, * * * There is no evidence that * * * [Mr. Monsour’s transfers], when made,

were not part of a scheme to defraud creditors or that
- 46 -

40See supra note 3.

the transfers, when made, did not have as their principal purpose the avoidance of the payment of tax. Many

of the transfers probably took place within the prohibited period of I.R.C. §6015(c)(4)(B)(ii).

Threshold condition 7 of Section 4.01 requires

petitioner to show that she did not file the return with

fraudulent intent. Petitioner testified that the approximately $9,000 of omitted income for each of two

years from her law practice was conceded by her in the

settlement of the prior Tax Court case because in her

view the $18,000 of unreported income was a small amount. This statement coupled with the unreported

income is some evidence of fraud on her part. 

With respect to the threshold condition set forth in section

4.01(5) of Revenue Procedure 2000-15 (i.e., no assets were transferred between the spouses filing the joint return as part of a

fraudulent scheme by such spouses), we have found that, pursuant

to the prenuptial agreement, starting around 1989 petitioner asked

Mr. Monsour to make her the joint owner of at least certain of Mr.

Monsour’s assets40 and that Mr. Monsour agreed and did so. On the

record before us, we find that Mr. Monsour did not transfer any

assets to petitioner as part of a fraudulent scheme by such

spouses. On that record, we further find that for each of the

taxable years at issue petitioner satisfies the threshold condition set forth in section 4.01(5) of Revenue Procedure 2000-15.

With respect to the threshold condition set forth in section

4.01(6) of Revenue Procedure 2000-15 (i.e., there were no disqualified assets transferred to the requesting spouse by the
- 47 -

41Threshold condition (6) of sec. 4.01 of Revenue Procedure

2000-15 provides that, for purposes of that revenue procedure,

the term “disqualified asset" has the meaning given to such term

by sec. 6015(c)(4)(B).

nonrequesting spouse), the term “disqualified asset” is defined in

section 6015(c)(4)(B)41 as follows:

SEC. 6015. RELIEF FROM JOINT AND SEVERAL LIABILITY ON 

 JOINT RETURN.

* * * * * * *

(c) Procedures To Limit Liability for Taxpayers No

Longer Married or Taxpayers Legally Separated or Not

Living Together.--

(4) Liability increased by reason of transfers

of property to avoid tax.-- 

* * * * * * *

(B) Disqualified asset. For purposes of 

this paragraph--

(i) In general.--The term “disqualified asset” means any property or right

to property transferred to an individual

making the election under this subsection

with respect to a joint return by the

other individual filing such joint return

if the principal purpose of the transfer

was the avoidance of tax or payment of

tax.

(ii) Presumption.--

(I) In general.--For purposes

of clause (i), except as provided in

subclause (II), any transfer which

is made after the date which is 1

year before the date on which the

first letter of proposed deficiency

which allows the taxpayer an opportunity for administrative review in

the Internal Revenue Service Office
- 48 -

42See supra note 3.

of Appeals is sent shall be presumed

to have as its principal purpose the

avoidance of tax or payment of tax.

(II) Exceptions.–-Subclause 

(I) shall not apply to any transfer

* * * which an individual establishes did not have as its principal

purpose the avoidance of tax or payment of tax.

Petitioner has failed to establish the date on which the IRS

sent to her the first letter of proposed deficiency which allowed

her an opportunity for administrative review in respondent’s

Appeals Office. However, we have found that, pursuant to the

prenuptial agreement, starting around 1989 petitioner asked Mr.

Monsour to make her the joint owner of at least certain of Mr.

Monsour’s assets42 and that Mr. Monsour agreed and did so. On the

record before us, we find that the principal purpose of Mr.

Monsour’s transfers to petitioner was not the avoidance of tax or

payment of tax. See sec. 6015(c)(4)(B)(ii). On that record, we

further find that petitioner has established that the presumption

in section 6015(c)(4)(B)(ii) is not applicable in this case. On

the record before us, we find that Mr. Monsour did not transfer

any disqualified assets to petitioner. On that record, we further

find that for each of the taxable years at issue petitioner

satisfies the threshold condition set forth in section 4.01(6) of

Revenue Procedure 2000-15.
- 49 -

43The liabilities for the remaining taxable years at issue

(i.e., 1989, 1991, 1992, and 1993) arose from respondent’s

assessments based upon the stipulated decision in the case for

the taxable years at issue. 

With respect to the threshold condition set forth in section

4.01(7) of Revenue Procedure 2000-15 (i.e., the requesting spouse

did not file the joint return for each of the taxable years at

issue with fraudulent intent), the mere failure to report income

is not sufficient to establish fraud. Petzoldt v. Commissioner,

92 T.C. 661, 700 (1989). On the record before us, we find that

petitioner did not file any of the joint returns for any of the

taxable years at issue with fraudulent intent. On that record, we

further find that for each of the taxable years at issue petitioner satisfies the threshold condition set forth in section

4.01(7) of Revenue Procedure 2000-15.

Where, as here, the requesting spouse satisfies the threshold

conditions set forth in section 4.01 of Revenue Procedure 2000-15,

section 4.02 of that revenue procedure sets forth the circumstances, in any case where a liability reported in a joint return

is unpaid, under which the IRS ordinarily will grant relief to

that spouse under section 6015(f). The only taxable year for

which there is a liability reported in a joint return which is

unpaid is 1990.43 Petitioner does not rely on section 4.02 of

Revenue Procedure 2000-15 in support of her claim for relief from

that unpaid liability. Instead, she relies on section 4.03 of
- 50 -

that revenue procedure, on which she also relies in support of her

claim for relief with respect to each of the taxable years 1989,

1991, 1992, and 1993.

Section 4.03 of Revenue Procedure 2000-15 provides a partial

list of positive and negative factors which respondent is to take

into account in considering whether respondent will grant an

individual full or partial equitable relief under section 6015(f). 

As Revenue Procedure 2000-15 makes clear, no single factor is to

be determinative in any particular case, all factors are to be

considered and weighed appropriately, and the list of factors is

not intended to be exhaustive. Rev. Proc. 2000-15 sec. 4.03,

2000-1 C.B. 447, 448.

We turn now to the application of section 4.03 of Revenue

Procedure 2000-15 to this case. Section 4.03(1) of Revenue

Procedure 2000-15 sets forth the following positive factors which

weigh in favor of granting relief under section 6015(f):

(a) Marital status. The requesting spouse is

separated * * * or divorced from the nonrequesting

spouse.

(b) Economic hardship. The requesting spouse would

suffer economic hardship (within the meaning of section

4.02(1)(c) of this revenue procedure) if relief from the

liability is not granted.

(c) Abuse. The requesting spouse was abused by the

nonrequesting spouse, but such abuse did not amount to

duress.

(d) No knowledge or reason to know. In the case of

a liability that was properly reported but not paid, the

requesting spouse did not know and had no reason to know
- 51 -

that the liability would not be paid. In the case of a

liability that arose from a deficiency, the requesting

spouse did not know and had no reason to know of the

items giving rise to the deficiency.

(e) Nonrequesting spouse’s legal obligation. The

nonrequesting spouse has a legal obligation pursuant to

a divorce decree or agreement to pay the outstanding

liability. This will not be a factor weighing in favor

of relief if the requesting spouse knew or had reason to

know, at the time the divorce decree or agreement was

entered into, that the nonrequesting spouse would not

pay the liability.

(f) Attributable to nonrequesting spouse. The

liability for which relief is sought is solely attributable to the nonrequesting spouse.

(We shall hereinafter refer to the positive factors set forth in

section 4.03(1)(a), (b), (c), (d), (e), and (f) of Revenue Procedure 2000-15 as the marital status positive factor, the economic

hardship positive factor, the abuse positive factor, the knowledge

or reason to know positive factor, the legal obligation positive

factor, and the attribution positive factor, respectively.)

With respect to the marital status positive factor set forth

in section 4.03(1)(a) of Revenue Procedure 2000-15, petitioner

does not dispute that that factor is not present in this case. 

With respect to the economic hardship positive factor set

forth in section 4.03(1)(b) of Revenue Procedure 2000-15, petitioner contends that that positive factor is present in this case. 

That is because, according to petitioner, “She will not be able to

pay bills as due if relief should not be granted.” 

In determining whether a requesting spouse will suffer
- 52 -

economic hardship, section 4.02(1)(c) of Revenue Procedure

2000-15, to which section 4.03(1)(b) of that revenue procedure

refers, requires reliance on rules similar to those provided in

section 301.6343-1(b)(4), Proced. & Admin. Regs. Section

301.6343-1(b)(4)(i), Proced. & Admin. Regs., generally provides

that an individual suffers an economic hardship if the individual

is unable to pay his or her reasonable basic living expenses. 

Section 301.6343-1(b)(4), Proced. & Admin. Regs., provides, in

pertinent part:

(ii) Information from taxpayer. In determining a

reasonable amount for basic living expenses the director

will consider any information provided by the taxpayer

including--

(A) The taxpayer’s age, employment status and

history, ability to earn, number of dependents, and

status as a dependent of someone else;

(B) The amount reasonably necessary for food,

clothing, housing (including utilities, home-owner

insurance, home-owner dues, and the like), medical

expenses (including health insurance), transportation,

current tax payments (including federal, state, and

local), alimony, child support, or other court-ordered

payments, and expenses necessary to the taxpayer’s

production of income (such as dues for a trade union or

professional organization, or child care payments which

allow the taxpayer to be gainfully employed);

(C) The cost of living in the geographic area in

which the taxpayer resides;

(D) The amount of property exempt from levy which

is available to pay the taxpayer’s expenses;

(E) Any extraordinary circumstances such as special

education expenses, a medical catastrophe, or natural

disaster; and
- 53 -

44Mr. Monsour also signed checks with respect to Mr.

Monsour’s investments as well as checks with respect to the joint

investments of petitioner and Mr. Monsour.

(F) Any other factor that the taxpayer claims bears

on economic hardship and brings to the attention of the

director.

Sec. 301.6343-1(b)(4)(ii), Proced. & Admin. Regs.

Petitioner presented no evidence as to the nature or the

amounts of the bills that she claims she will be unable to pay if

she is not granted relief in this case. On the record before us,

we find that petitioner has failed to carry her burden of establishing that the expenses claimed by petitioner (i.e., expenses

for bills) qualify as basic living expenses within the meaning of

section 301.6343-1(b)(4), Proced. & Admin. Regs. Assuming

arguendo that the bills claimed by petitioner qualify as basic

living expenses under that section, on the instant record, we find

that petitioner has failed to carry her burden of establishing

that the amounts of her claimed bills are reasonable. Assuming

arguendo that the amount of the bills claimed by petitioner

qualify as a reasonable amount for basic living expenses, we have

found that Mr. Monsour, and not petitioner, signed the checks to

pay at least certain of the bills relating to the residence of

petitioner and Mr. Monsour.44 On the record before us, we find

that petitioner has failed to carry her burden of establishing

that she will suffer an economic hardship if the Court were to

deny her relief under section 6015(f). On that record, we further
- 54 -

find that petitioner has failed to carry her burden of establishing that the economic hardship positive factor set forth in

section 4.03(1)(b) of Revenue Procedure 2000-15 is present in this

case.

With respect to the abuse positive factor set forth in

section 4.03(1)(c) of Revenue Procedure 2000-15, petitioner does

not dispute that that positive factor is not present in this case. 

With respect to the knowledge or reason to know positive

factor set forth in section 4.03(1)(d) of Revenue Procedure

2000-15, petitioner makes no argument that that positive factor is

present with respect to the taxable year 1990. On the record

before us, we find that petitioner has failed to carry her burden

of establishing that she did not know, and had no reason to know,

that the liability reported in the original 1990 joint return

would not be paid. 

As for each of the taxable years 1989, 1991, 1992, and 1993,

petitioner argues that the knowledge or reason to know positive

factor is present with respect to each such year. The parties do

not dispute that the types of facts and circumstances that the

Court should consider in determining whether a requesting spouse

has established that the knowledge or reason to know positive

factor is present are the same types of facts and circumstances

that the Court has considered in determining whether a requesting

spouse has satisfied section 6015(b)(1)(C). Indeed, in holding
- 55 -

45See also Bartak v. Commissioner, T.C. Memo. 2004-83; Doyel

v. Commissioner, T.C. Memo. 2004-35.

46See supra notes 9 through 12 and 18.

47Nor does the record establish the nature of the determinations (i.e., omitted income or erroneous deductions) that respondent made in the notice for the taxable years at issue for one or

more of the taxable years 1989, 1991, 1992, and 1993 with respect

to American Supply and MFS Lifetime. MFS Lifetime, in which Mr.

Monsour invested, was a mutual fund. It thus appears that any

determination by respondent relating to MFS Lifetime might have

been a determination of omitted income. However, petitioner has

failed to establish, and the record does not provide a basis for

(continued...)

that a requesting spouse did not satisfy section 6015(f), the

Court has relied on, inter alia, its findings that such spouse did

not satisfy section 6015(b)(1)(C). See, e.g., Butler v. Commissioner, 114 T.C. at 284-286, 292.45

The determinations about which we are aware46 that respondent

made in the notice for the taxable years at issue relate to the

joint bank accounts of petitioner and Mr. Monsour, petitioner’s

separate bank account, petitioner’s law practice bank account,

Monsour Medical Center, Laurel Valley Farms, the Three Crowns

Hotel, Azure Tides, Inc., Georgetown Square, the Three Crowns

Hotel Back Court, American Supply, and MFS Lifetime. As discussed

above, the record does not establish, inter alia, (1) the taxable

year or years (i.e., 1989, 1991, 1992, and/or 1993) to which each

of the determinations about which we are aware pertains and 

(2) the portion, if any, of the understatement for each of those

years that is attributable to each such determination.47 On the
- 56 -

47(...continued)

us to find, that any determination by respondent relating to MFS

Lifetime was a determination of omitted income.

record before us, we are unable to find whether or not each of

respondent’s determinations about which we are aware gave rise to

a portion or all of an understatement for one or more of the

taxable years 1989, 1991, 1992, and 1993. 

Assuming arguendo that each of respondent’s determinations

about which we are aware had given rise to a portion or all of an

understatement for one or more of the taxable years 1989, 1991,

1992, and 1993, we turn first to the determinations of omitted

income relating to the joint bank accounts of petitioner and Mr.

Monsour, petitioner’s separate bank account, petitioner’s law

practice bank account, and Monsour Medical Center. Petitioner

concedes that she was aware of the omitted income with respect to

her law practice bank account. However, she argues that she did

not know, and had no reason to know, of the other items of omitted

income. On the record before us, we reject that argument. As for

the determinations of omitted income relating to the joint bank

accounts of petitioner and Mr. Monsour and petitioner’s separate

bank account, petitioner does not dispute that the record establishes: (1) Petitioner’s name was on each of those accounts; 

(2) respondent made determinations of omitted income with respect

to each such account; and (3) no other facts relevant to such

omitted income. On the record before us, we find that petitioner
- 57 -

has failed to establish that she did not know, and had no reason

to know, of the transactions relating to the joint bank accounts

of petitioner and Mr. Monsour, petitioner’s separate bank account,

and petitioner’s law practice bank account that we assume arguendo

gave rise to a portion or all of an understatement for one or more

of the taxable years 1989, 1991, 1992, and 1993. 

As for any determination by respondent of omitted income with

respect to Monsour Medical Center, petitioner does not dispute

that the record establishes: (1) Respondent made a determination

of omitted income in one or more of the taxable years 1989, 1991,

1992, and 1993 with respect to Monsour Medical Center; (2) Mr.

Teitelbaum, legal counsel for Monsour Medical Center, sent to

petitioner a copy of his response to the subpoena that respondent

served on Monsour Medical Center in the case for the taxable years

at issue in order to determine whether there was any omitted

income with respect to that entity; and (3) no other facts relevant to such omitted income. On the record before us, we find

that petitioner has failed to establish that she did not know, and

had no reason to know, of any transaction relating to Monsour

Medical Center that we assume arguendo gave rise to a portion or

all of an understatement for one or more of the taxable years

1989, 1991, 1992, and 1993.

We turn now to the determinations of erroneous deductions

relating to Laurel Valley Farms, the Three Crowns Hotel, Azure
- 58 -

Tides, Inc., Georgetown Square, and the Three Crowns Hotel Back

Court that we assume arguendo gave rise to a portion or all of an

understatement for one or more of the taxable years 1989, 1991,

1992, and 1993. We note initially that petitioner contends

inconsistently (1) that she did not know, and had no reason to

know, about Mr. Monsour’s investments and (2) that she knew about

Mr. Monsour’s investments. We reject petitioner’s claim that she

did not know, and had no reason to know, about Mr. Monsour’s

investments. Petitioner does not contend, and the record does not

establish, that Mr. Monsour was evasive and deceitful with her

concerning Mr. Monsour’s investments or the joint investments of

petitioner and Mr. Monsour. Before their marriage on July 3,

1983, petitioner and Mr. Monsour entered into a prenuptial agreement which listed all of Mr. Monsour’s assets. At all relevant

times, petitioner reviewed and mailed the checks that Mr. Monsour

signed with respect to Mr. Monsour’s investments as well as checks

with respect to the joint investments of petitioner and Mr.

Monsour. Moreover, at all relevant times, including throughout

the taxable years at issue, petitioner knew about Mr. Monsour’s

monthly trips to check on his Florida investments, and sometimes

she traveled with him on those trips. At a time not disclosed by

the record after 1986, petitioner questioned Mr. Monsour about

whether Mr. Monsour’s Florida investments were worthwhile, to

which he responded that they were. In addition, in signing each
- 59 -

48Most of the losses claimed in Schedules C and in Schedules

E of the 1989 joint return, the 1991 joint return, the 1992 joint

return, and the 1993 joint return were with respect to Laurel

Valley Farms, the Three Crowns Hotel, Azure Tides, Inc.,

Georgetown Square, and the Three Crowns Hotel Back Court.

49Petitioner knew of the risk of an IRS challenge with

respect to at least the Three Crowns Hotel and the Three Crowns

Hotel Back Court. That is because (1) in the notice for the

taxable years 1987 and 1988 respondent made determinations to

disallow deductions of $126,632 and $136,641 for 1987 and 1988,

respectively, with respect to the Three Crowns Hotel and 

(2) before respondent issued that notice petitioner and Mr.

Monsour agreed to respondent’s proposed determinations to increase their income by $10,681 and $3,171 for 1987 and 1988,

respectively, with respect to the Three Crowns Hotel Back Court. 

In addition, we presume that petitioner knew of the risk of an

IRS challenge with respect to certain losses that petitioner and

Mr. Monsour claimed in their joint returns for 1987 and 1988 with

respect to certain partnerships and S corporations. That is

(continued...)

of the joint returns for 1989, 1991, 1992, and 1993, petitioner,

who received three degrees, including a law degree, from the

University of Pittsburgh, was aware, inter alia, (1) that such

returns claimed substantial losses in Schedules C ranging from

$24,275 to $187,336 and in Schedules E ranging from $58,533 to

$334,910,48 (2) that such claimed losses reduced income reported in

such returns, and (3) that there were (a) no tax shown due in the

1989 joint return or the 1991 joint return, (b) tax shown due of

$1,255 in the 1992 joint return, and (c) tax shown due of $274 in

the 1993 joint return. Moreover, in signing each of the joint

returns for the taxable years 1989, 1991, 1992, and 1993, petitioner did not raise any questions with Mr. Monsour or Mr. Iezzi,

the preparer of those returns, regarding any of them.49
- 60 -

49(...continued)

because before respondent issued the notice for the taxable years

1987 and 1988 petitioner and Mr. Monsour agreed to respondent’s

proposed determinations to disallow such losses.

50There is no published authority of the U.S. Court of

Appeals for the Third Circuit, the Court of Appeals to which an

appeal in this case would normally lie, setting forth that

(continued...)

On the record before us, we find that petitioner has failed

to establish that she did not know, and had no reason to know, of

the transactions relating to Laurel Valley Farms, the Three Crowns

Hotel, Azure Tides, Inc., Georgetown Square, and the Three Crowns

Hotel Back Court that we assume arguendo gave rise to a portion or

all of an understatement for one or more of the taxable years

1989, 1991, 1992, and 1993. See Jonson v. Commissioner, 118 T.C.

at 115-116; Bokum v. Commissioner, 94 T.C. 126, 150-151 (1990),

affd. 992 F.2d 1132 (11th Cir. 1993). On that record, we further

find that petitioner has failed to establish that a reasonably

prudent taxpayer in her position at the time she signed each of

the joint returns for the taxable years 1989, 1991, 1992, and 1993

could not have been expected to know that each of those returns

contained an understatement of tax or that further investigation

was warranted. See Hayman v. Commissioner, 992 F.2d 1256, 1261-

1262 (2d Cir. 1993), affg. T.C. Memo. 1992-228; Price v. Commissioner, 887 F.2d 959, 965-966 (9th Cir. 1989), revg. an Oral

Opinion of this Court; Mora v. Commissioner, 117 T.C. 279, 289

(2001).50
- 61 -

50(...continued)

Court’s view as to whether the approach with respect to knowledge

or reason to know of erroneous deductions in Bokum v. Commissioner, 94 T.C. 126, 150-151 (1990), affd. 992 F.2d 1132 (11th

Cir. 1993), or in Price v. Commissioner, 887 F.2d 959, 965-966

(9th Cir. 1989), revg. an Oral Opinion of this Court, is the

correct approach. In the instant case, petitioner has failed to

establish that the knowledge or reason to know positive factor is

present in this case under either the approach in Bokum or the

approach in Price with respect to each of the erroneous deductions in question that we assume arguendo gave rise to a portion

or all of an understatement for one or more of the taxable years

1989, 1991, 1992, and 1993.

On the record before us, we find that petitioner has failed

to carry her burden of establishing that the knowledge or reason

to know positive factor set forth in section 4.03(1)(d) of Revenue

Procedure 2000-15 is present in this case.

With respect to the legal obligation positive factor set

forth in section 4.03(1)(e) of Revenue Procedure 2000-15, petitioner and Mr. Monsour were married at all relevant times. On the

record before us, we find that the legal obligation factor is a

neutral factor in this case. 

With respect to the attribution positive factor set forth in

section 4.03(1)(f) of Revenue Procedure 2000-15, petitioner

contends that that positive factor is present in this case. In

order for that factor to be present, petitioner must establish

that the liability for each of the taxable years at issue for

which she seeks relief is solely attributable to Mr. Monsour. We

have found that petitioner has failed to carry her burden of

establishing under section 6015(b)(1)(B) that there is an under-
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statement of tax for any of the taxable years 1989, 1991, 1992,

and 1993 that is attributable to erroneous items of Mr. Monsour. 

On the record before us, we find for the reasons set forth in our

consideration of petitioner’s position with respect to section

6015(b)(1)(B) that petitioner has failed to carry her burden of

establishing that the liability for each of the taxable years

1989, 1991, 1992, and 1993 for which she seeks relief is solely

attributable to Mr. Monsour. As for the taxable year 1990, on the

record before us, we find for similar reasons that petitioner has

failed to carry her burden of establishing that the liability for

that year for which she seeks relief is solely attributable to Mr.

Monsour.

On the record before us, we find that petitioner has failed

to carry her burden of establishing that the attribution positive

factor set forth in section 4.03(1)(f) of Revenue Procedure 2000-

15 is present in this case.

Turning to the negative factors weighing against granting

relief under section 6015(f) set forth in section 4.03(2) of

Revenue Procedure 2000-15, those factors are:

(a) Attributable to the requesting spouse. The

unpaid liability or item giving rise to the deficiency

is attributable to the requesting spouse.

(b) Knowledge, or reason to know. A requesting

spouse knew or had reason to know of the item giving

rise to a deficiency or that the reported liability

would be unpaid at the time the return was signed. This

is an extremely strong factor weighing against relief. 

Nonetheless, when the factors in favor of equitable
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relief are unusually strong, it may be appropriate to

grant relief under § 6015(f) in limited situations where

a requesting spouse knew or had reason to know that the

liability would not be paid, and in very limited situations where the requesting spouse knew or had reason to

know of an item giving rise to a deficiency.

(c) Significant benefit. The requesting spouse has

significantly benefitted (beyond normal support) from

the unpaid liability or items giving rise to the deficiency. See § 1.6013-5(b).

(d) Lack of economic hardship. The requesting

spouse will not experience economic hardship (within the

meaning of section 4.02(1)(c) of this revenue procedure)

if relief from the liability is not granted.

(e) Noncompliance with federal income tax laws. 

The requesting spouse has not made a good faith effort

to comply with federal income tax laws in the tax years

following the tax year or years to which the request for

relief relates.

(f) Requesting spouse’s legal obligation. The

requesting spouse has a legal obligation pursuant to a

divorce decree or agreement to pay the liability.

(We shall hereinafter refer to the negative factors set forth in

section 4.03(2)(a), (b), (c), (d), (e), and (f) of Revenue Procedure 2000-15 as the attribution negative factor, the knowledge or

reason to know negative factor, the significant benefit negative

factor, the economic hardship negative factor, the noncompliance

negative factor, and the legal obligation negative factor, respectively.)

The parties do not dispute that the knowledge or reason to

know negative factor, the economic hardship negative factor, and

the legal obligation negative factor set forth in section

4.03(2)(b), (d), and (f), respectively, of Revenue Procedure
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51We do not believe that those two factors are exactly

opposite because the attribution negative factor does not contain

the word “solely” that appears in the attribution positive

factor.

2000-15 are the opposites of the knowledge or reason to know

positive factor, the economic hardship positive factor, and the

legal obligation positive factor set forth in section 4.03(1)(d),

(b), and (e), respectively, of that revenue procedure. Nor do 

the parties dispute that the attribution negative factor set forth

in section 4.03(2)(a) of Revenue Procedure 2000-15 is essentially

the opposite of the attribution positive factor set forth in

section 4.03(1)(f) of that revenue procedure.51

We have found that petitioner has failed to carry her burden

of establishing that the economic hardship positive factor and 

the knowledge or reason to know positive factor set forth in

section 4.03(1)(b) and (d), respectively, of Revenue Procedure

2000-15 are present in this case. On the record before us, we

find that petitioner has failed to carry her burden of establishing that the economic hardship negative factor and the knowledge

or reason to know negative factor set forth in section 4.03(2)(d)

and (b), respectively, of that revenue procedure are not present

in this case.

With respect to the attribution negative factor set forth in

section 4.03(2)(a) of Revenue Procedure 2000-15, we have found

that petitioner has failed to carry her burden of establishing
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that the attribution positive factor set forth in section

4.03(1)(f) of that revenue procedure is present in this case. On

the record before us, we find for the reasons set forth in our

consideration of the attribution positive factor that petitioner

has failed to carry her burden of establishing (1) that no item

giving rise to a portion or all of the understatement for each of

the taxable years 1989, 1991, 1992, and 1993 and (2) that no

portion of the unpaid liability for 1990 are attributable to

herself. On the record before us, we find that petitioner has

failed to carry her burden of establishing that the attribution

negative factor set forth in section 4.03(2)(a) of Revenue Procedure 2000-15 is not present in this case.

With respect to the significant benefit negative factor set

forth in section 4.03(2)(c) of Revenue Procedure 2000-15, petitioner makes no argument that that negative factor is not present

with respect to the taxable year 1990. On the record before us,

we find that petitioner has failed to carry her burden of establishing that she did not significantly benefit beyond normal

support from the unpaid liability with respect to the taxable year

1990.

As for each of the taxable years 1989, 1991, 1992, and 1993,

petitioner argues that

While it may be arguable that the Petitioner benefited

by the reduced taxes and/or omitted income, those arguments appear to be without merit * * * [based on] Petitioner’s own testimony which stated that her lifestyle
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remained unchanged or got worse during the years at

issue. 

Respondent argues that

The erroneous deductions giving rise to the deficiencies

and the 1990 unpaid liability provided both of the

Monsours with significantly more disposable income than

they otherwise would have had.

Normal support is not a significant benefit. Flynn v.

Commissioner, 93 T.C. 355, 367 (1989). Normal support is measured

by the circumstances of the parties. Id. In order to determine

whether the requesting spouse significantly benefited from the

items giving rise to the deficiency, we consider whether the

requesting spouse and the nonrequesting spouse were able to make

expenditures in the taxable years in question that they otherwise

would not have been able to make. See Alt v. Commissioner, 119

T.C. at 314; Jonson v. Commissioner, 118 T.C. at 119-120.

We have found that from the time of their marriage on July 3,

1983, until 1986, petitioner and Mr. Monsour did not worry about

money and did not scrutinize their discretionary spending to any

significant extent. In 1986, Mr. Monsour began to experience tax

problems when Congress enacted certain provisions into the Code

that in general eliminated the favorable tax treatment that the

Code had previously permitted with respect to at least certain of

Mr. Monsour’s Florida investments. As a result of, inter alia,

those tax problems, petitioner and Mr. Monsour began to scrutinize

their discretionary spending much more than they had in the past.
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Nonetheless, on the record before us, we find that petitioner has

failed to establish the amount that she and Mr. Monsour expended

annually for their normal support before, during, and after the

taxable years at issue. On that record, we further find that

petitioner has failed to carry her burden of persuading us that

she did not significantly benefit beyond normal support from the

items giving rise to the deficiency with respect to each of the

taxable years 1989, 1991, 1992, and 1993.

On the record before us, we find that petitioner has failed

to carry her burden of establishing that the significant benefit

negative factor set forth in section 4.03(2)(c) of Revenue Procedure 2000-15 is not present in this case.

With respect to the noncompliance negative factor set forth

in section 4.03(2)(e) of Revenue Procedure 2000-15, petitioner

contends that she “has followed all of the tax laws in the years

since 1993.” We have found that at the time of the trial in this

case in September 2003 petitioner and Mr. Monsour had an unpaid

liability of $60,000 with respect to their 1998 joint return. On

the record before us, we find that petitioner has failed to carry

her burden of establishing that the noncompliance negative factor

set forth in section 4.03(2)(e) of Revenue Procedure 2000-15 is

not present in this case. 

With respect to the legal obligation negative factor set

forth in section 4.03(2)(f) of Revenue Procedure 2000-15, we have
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found that the legal obligation positive factor set forth in

section 4.03(1)(e) of Revenue Procedure 2000-15 is a neutral

factor in this case. On the record before us, we find that the

legal obligation negative factor set forth in section 4.03(2)(f)

of that revenue procedure is a neutral factor in this case.

On the record before us, we find that petitioner has failed

to carry her burden of establishing any other factors with respect

to the taxable years at issue that are not set forth in Revenue

Procedure 2000-15 and that weigh in favor of granting her relief

under section 6015(f).

Based upon our examination of the entire record before us, we

find that petitioner has failed to carry her burden of establishing that respondent abused respondent’s discretion in denying her

relief under section 6015(f) with respect to any of the taxable

years at issue. 

We have considered all of the contentions and arguments of

the parties that are not discussed herein, and we find them to be

without merit, irrelevant, and/or moot.

To reflect the foregoing,

Decision will be entered

for respondent.