TAX COURT OPINION

Case: Deborah L. Lewis, Petitioner and Ronald L. Lewis, Intervenor
Docket Number: 15908-09S
Judge: Colvin
Opinion Type: bench
Filed: 06/10/2010
Pages: 10

UNITED STATES TAX COURT WASHINGTON , DC 2021 7 DEBORAH L . LEWIS, Petitione r and ) Docket No . 15908-09S . RONALD L . LEWIS, Intervenor ) V . COMMISSIONER OF INTERNAL REVENUE , Respondent O R D E R Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it i s ORDERED that the Clerk of the Court shall transmit herewith to petitioners and to respondent a copy of the pages of the transcript of the trial in the above case before Judge Joseph Robert Goeke at Cincinnati, Ohio, on May 25, 2010, containing his oral findings of fact and opinion rendered at the .conclusion of the trial . In accordance with the oral findings of fact and opinion, a decision will be entered under Rule 155 . (Signed ) Joseph Robert Goeke Judge Dated : Washington, D .C . June 10, 2010 SERVED JUN' IQ 2010 3 1 Bench Opinion by Judge Joseph Robert Goeke 2 Deborah L . Lewis, Petitioner, an d 3 Robert L . Lewis, Intervenor Docket No . 15908-09S 4 March 25, 201 0 5 THE COURT : The Court has decided to render 6 oral findings of fact a opinion in this case , and the con 7 following represents the Court ' s oral findings of fac t 8 and opinion . The oral findings of fact and opinion 9 shall not be relied upon as precedent in any other 10 case . 11 This opinion is rendered pursuant to Section 12 . 7459 ( b) and Rule 152 of the Tax Court Rules o f 13 Practice and Procedure . Section references herein are 14 to the Internal Revenue Code in effect for the yea r 15 2006, and Rule references are to the Tax Court Rules 16 of Practice and Procedure . 17 This case was heard pursuant to th e 18 provisions of Section 7463 of the Internal Revenue 19 Code in effect at the time the petition was filed . 20 Pursuant to Section 7463(b), the decision to b e 21 entered is not reviewable by any other Court . Section 22 references generally , hereinafter, are to the Internal 23 Revenue Code in effect in the year 2006, as state d 24 previously . 25 This case arises based upon Petitioner' s Heritage Reporting Corporation (202) 628-4888 4 1 disagreement with Respondent's determination that she 2 is not entitled to relief from joint severabl e 3 liability for the year 2006 joint federal income tax 4 return she filed with her husband, Ronald Lewis . 5 Petitioner asserts that she is entitled to relief 6 under Sections 6015(b), (c), and (f) . 7 The facts of this case are straightforward . 8 Petitioner and the Intervenor were married in May 2002 . Throughout the years of their marriage, prio r 10 to 2006, the Intervenor was not employed and did not 11 make significant amounts of income . The Petitioner, 12 however, was employed and was a consistent wag e 13 earner . They filed joint income tax returns to obtain 14 the benefits of filing jointly . 15 During the year 2006, the Interveno r 16 received Social-Security income as reflected in a Form 17 SSA-1099, which was issued to him for that year . The 18 Form SSA reflected a total amount of benefits o f 19 $35,546 .50 . These benefits included amounts for prior 20 years, for 2002, 2003, 2004, and 2005 . $5,003 o f 21 these benefits was paid as attorney's fees, and a 22 small portion was paid for Medicare Part B premiums . 23 The Form SSA reflects a check was issued or direct 24 deposit was provided to the Intervenor in the amount 25 of $29,981 . Heritage Reporting Corporation (202) 628-4888 5 1 The Intervenor testified that he did no t 2 actually sign the 2006 return but that he agreed with 3 the filing of a joint return with the Petitioner . No 4 one disputes that a valid joint return was filed for 5 the year 2006 . 6 There were no federal income taxes withheld 7 from the benefits that the Intervenor received fro m 8 the Social Security Administration in 2006 . 9 Petitioner received a small payment of retirement 10 benefits which were taxable to her in 2006, in th e 11 amount of $179, which she did not report on the joint 12 income tax return . The parties have agreed that this 13 amount is taxable to the Petitioner . 14 Petitioner prepared the joint federal income 15 tax return for 2006 and prepared the returns for the 16 prior years of their marriage . The joint income tax 17 return for 2006 reflects two exemptions, one for the 18 Petitioner and one for the Intervenor . There were no 19 exemptions claimed for other individuals . The joint 20 income tax return for 2006 was filed in March 2007 . 21 Petitioner's marriage with the Intervenor 22 was difficult, in the year 2006, and at one point in 23 the year, Petitioner filed a complaint with the local 24 police because the Intervenor had returned home in an 25 intoxicated state and had broken into her bedroom an d Heritage Reporting Corporation (202) 628-4888 6 1 physically assaulted her . 2 The testimony was conflicting on whether the 3 Intervenor had advised the Petitioner about the amount 4 of the Social Security benefits he received in 2006 . 5 Petitioner's testimony was that he had not indicated 6 that he had received any benefits in 2006 . 7 Her testimony in this regard is in conflict 8 with information that she previously submitted t o 9 Respondent during the consideration of Respondent's -- 10 strike that -- during the consideration of her Section 11 6015 request for relief . She, in a letter, had 12 advised Respondent that she was aware that some Social 13 Security benefits were received but not as to th e 14 amount . She had orally stated the same thing t o 15 Respondent's investigators . At trial, she said she 16 had no knowledge of the benefits . 17 We find this inconsistency to be somewhat 18 disturbing . Nevertheless, we do accept the fact that 19 Petitioner did not know the exact amount of th e 20 benefits that the Intervenor received, becaus e 21 throughout their marriage, they had separate ban k 22 accounts, and obviously, theme communication between 23 them . was deteriorating throughout 2006 . It is , 24 however, clear that the Petitioner was aware that some 25 money was spent on the home that she purchased a s Heritage Reporting Corporation (202) 628-4888 7 1 their marital domicile, in which they lived in 2006, 2 and in which her in-laws lived in 2006 . 3 The Intervenor testified that he purchased a 4 gazebo and a shed with total purchase price o f 5 approximately $7,600 . The Petitioner, in he r 6 testimony, did not deny these purchases, but rather, 7 alleged that she thought the source of the purchases 8 was Petitioner's -- strike that -- Intervenor' s 9 parents ; however, this seems unlikely given the poo r 10 financial condition i n which Intervenor's parents were 11 i A'£he jrEiaA 2006, which led them to move in with th e ',r 1) A 12 Petitioner and the Intervenor . 13 The other basic facts are procedural in that 14 Respondent disallowed Petitioner's claim for relie f 15 and Petitioner filed a timely petition in this Court . 16 Subsequently, the marriage was dissolved an d 17 Petitioner has asserted that in addition to her claim 18 for relief under Section 6015(f), she is entitled to 19 relief under Section 6015(b) and (c) . We will analyz e 20 and apply these three sections in order . 21 In arguing that she's entitled to relie f 22 under Sections 6015(b) and (c), Petitioner's position 23 is inconsistent with Respondent's position at trial . 24 Respondent, at trial, concedes that Petitioner i s 25 entitled to relief under Section 6015(f), but not Heritage Reporting Corporation (202) 628-4888 8 1 under Sections (b) and (c) . 2 We agree with Respondent's analysis relative 3 to Sections (b) and (c) for the simple fact tha t 4 Petitioner -- we find that Petitioner did hav e 5 knowledge of the Social Security Benefits having been 6 received in the year 2006, even though she did no t 7 know the amount of the benefits received . Knowledge 8 that some benefits were received, we believe, removes 9 the possibility that Petitioner would be entitled t o 10 relief under Subsections (b) and (c) of Section 6015 . 11 Regarding Section 6015(f), we agree with 12 Respondent's analysis, to a certain extent, tha t 13 Petitioner is entitled to relief under Sectio n 14 6015(f) . Respondent determines that Petitioner' s 15 marriage, having been dissolved, that -- the fact that 16 she was no longer married to the Intervenor was a 17 factor favorable to relief under Section 6015(f) and 18 Revenue Procedure 2003-61 . Respondent also found, in 19 Respondent's pretrial memorandum, that there was no 20 -economic hardship to the Petitioner as a result of the 21 potential liability, and the parties have stipulated 22 to. that extent in the Stipulation of Facts, so thi s 23 factor is against relief . And, another facto r 24 considered in the revenue procedure, and by Respondent 25 in Respondent's trial memorandum is spousal abuse . Heritage Reporting Corporation (202) 628-4888 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 This factor clearly favors the Petitioner, as she wa s abused by the Intervenor . Knowledge or reason to know is, as we've stated previously, a factor which weighs agains t relief, and Respondent so found in Respondent's tria l memorandum, and we so find based upon the record o f trial . Intervenor's legal obligation, as a resul t of the decree of divorce and agreement of the parties , is a factor that Respondent determined to be . neutra l in Respondent's trial memorandum, and we agree wit h this determination . . Respondent determined in the tria l memorandum that the liability was largely attributabl e to the nonrequesting spouse, and we agree with thi s determination, which favors relief . Another factor in the revenue procedure i s whether the Petitioner received a significant benefit . Respondent found, in Respondent's trial memorandum , that there was no significant benefit that Petitione r received, and we would agree with Respondent' s determination and find that this factor favor s Petitioner . In subsequent years, Respondent determine d that Petitioner has cooperated and timely filed her Heritage Reporting Corporation (202) 628-4888 1 0 1 federal income tax returns, and we have no basis t o 2 dispute this, and the Intervenor provided no evidence 3 in dispute of this, so we find this factor favor s 4 Petitioner . 5 Given these factors, Respondent concluded, 6 in Respondent's trial memorandum and at trial, that 7 Petitioner should be granted relief . Petitioner , 8 obviously, agrees with this determination, and th e Intervenor opposes this determination . We agree wit h 10 Respondent's determination but find an exception with 11 respect to the amounts that were spent by th e 12 Intervenor to improve the house that the Intervenor 13 and the Petitioner lived in, in 2006 . 14 While the circumstances were obviousl y 15 difficult for the Petitioner, given the Intervenor's 16 disreputable behavior, we find on the record tha t 17 Petitioner was aware that the Intervenor had spent 18 roughly $7,600 on improving the house, and we fin d 19 that the Petitioner was aware that the Intervenor had 20 received some Social Security benefits . 21 These two circumstances cause us to find 22 that the Petitioner had some responsibility t o 23 investigate the taxability of these Social Security 24 benefits, and so we find, to the extent of $7,600 and 25 the application of Section 86 to that amount o f Heritage Reporting Corporation (202) 628-4888 1 1 1 benefits, the Petitioner is not relieved of joint and 2 severable liability under Section 6015(f), but to the 3 extent of the remaining amount of Social Securit y 4 distribution, that the Petitioner is so relieved . 5 Given these findings, a Rule 155 computation 6 will be necessary in this case, and we hereby direc t 7 the parties to submit such a computation within 90 8 days . 9 10 To clarify the Court's analysis of the $7,600, the Court would expect the deficiency amount 11 that the Petitioner would remain liable for, to be 12 computed as if the entire amount of Social Security 13 distributions received by the Intervenor in 2006 was 14 limited to $7,600, and the amount of the deficiency so 15 determined would be the only amount of deficienc y 16 associated with the Social Security distribution upon 17 which Petitioner would remain liable in 2006 . 18 This concludes the Court's oral findings of 19 fact and opinion in this case . 20 (Whereupon, at 11 :45 a .m ., the bench opinion in 21 the above-entitled matter was concluded . ) 22 23 24 25 Heritage Reporting Corporation (202) 628-4888