TAX COURT OPINION

Case: Fariba Akhavan
Docket Number: 10353-17
Judge: Thornton
Opinion Type: bench
Filed: 04/26/2018
Pages: 12

UNITED STATES TAX COURT WASHINGTON, DC 20217 FARIBA AKHAVAN, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ) ) Docket No. 10353-17. ) ) ) ) ORDER Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it is ORDERED: That the Clerk of the Court shall transmit herewith to petitioner and to respondent a copy of the pages of the transcript of the trial in the above case before Judge Michael B. Thornton at Los Angeles, California, containing his oral findings of fact and opinion rendered at the trial session at which the case was heard. In accordance with the oral findings of fact and opinion, decision will be entered for petitioner. (Signed) Michael B. Thornton Judge Dated: Washington, D.C. April 26, 2018 880E0 APR 2 7 2018 3 1 2 3 4 5 6 8 9 Bench Opinion by Judge Michael B. Thornton April 16, 2018 Fariba Akhavan v. Commissioner of Internal Revenue Docket No. 10353-17 The Court has decided to render oral findings of fact and opinion in this case, and the following represents the Court's oral findings of fact and opinion. Except as otherwise provided by Rule 152 (c) of the Tax Court Rules of Practice and Procedure, the oral findings 10 of fact and opinion shall not be relied upon as precedent 11 12 in any other case. This bench opinion is made pursuant to the 13 authority granted by section 7459 (b) and Rule 152. 14 Section references are to the Internal Revenue Code in 15 effect for the taxable years at issue. All rule 16 references are to the Tax Court Rules of Practice and 17 Procedure. All monetary amounts are rounded to the 18 19 nearest dollar. This case was tried on April 16, 2018 in Los 20 Angeles, California. Petitioner appeared pro se. Steven 21 M. Roth appeared on behalf of respondent. 22 23 24 This proceeding was commenced under section 6015 for review of respondent's determination that petitioner 8 not entitled to relief from liability for an 25 understatement of 2009 income tax. 73)406-2250|operationsoascrbers.net|www.escribers.net 1 2 3 4 5 6 8 Findings of Fact 4 Petitioner married Babak Aghakhani in or about 2003. They filed a joint return for 2009. On November 7, 2011, respondent issued a notice of deficiency to them. The $4, 749 deficiency was attributable to unreported interest income of $9 and unreported income from a TD Ameritrade account. Respondent concedes that the $9 of interest is immaterial to this case. The TD Ameritrade account was opened by 10 petitioner's ex-husband, who used petitioner's name and 11 Social Security number to do so. Although petitioner saw 12 emails from time to time which may have related to the 13 Ameritrade account, she was unable to follow the links 14 15 contained in the emails because she did not have the password to the account. Petitioner did not know anything 16 about the account's contents or activity until respondent 17 began to examine her section 6015 claim, at which time 18 petitioner sought to obtain control over the account. 19 Petitioner has never made any withdrawals from the 20 account, which currently contains about $60. 21 In addition to the TD Ameritrade account, 22 petitioner's ex-husband controlled their finances during 23 their marriage. When they first married, they established 24 a joint Bank of America account. At some point, a Bank of 25 America account was opened in petitioner's name, and at 973}406-2250|operationseescrbersnet|www.escribersnet 5 least some of the amounts that eventually were transferred into the TD Ameritrade account were transferred from this account, although petitioner disclaims any knowledge of these transfers. Petitioner was a homemaker with a high- school education and generally did not make any financial decisions or control any money, other than amounts petitioner's ex-husband allowed her for groceries and other incidental shopping. 1 2 3 5 6 8 Petitioner and her ex-husband separated on 10 January 24, 2013, and their divorce was finalized in 11 October, 2014. Under the terms of the divorce, 12 petitioner's ex-husband is required to pay $1,600 per 13 month in child support for their child, who is in 14 petitioner's custody, and $550 spousal support per month. 15 Petitioner's ex-husband does not generally pay the full 16 17 18 amounts of child support and spousal support every month, as required by the divorce agreement. When he pays child support, it is generally paid to cover certain of the 19 child's expenses directly; petitioner does not receive any 20 21 check from her ex-husband for child support. Additionally, under the terms of their divorce, 22 petitioner's ex-husband is responsible for all income 23 taxes for the years in which petitioner and her ex- 24 husband were married. Petitioner's ex-husband has since 25 declared bankruptcy and respondent represents that cribers (973}406-2250l operationseescrbetsmet j www.esalbetsmet 1 2 3 4 5 6 8 petitioner's ex-husband's tax liability for 2009 has been discharged. In his application for bankruptcy, petitioner's ex-husband listed $0 as his domestic support 6 obligation. Petitioner now has a job as a nurse's assistant. Her monthly income from this job ranges from $1, 650 to $1,750. Petitioner and her son reside with petitioner's sister. Petitioner pays approximately $300 to her sister for utilities each month. Petitioner has a car payment of 10 about $570 per month and a car insurance payment of about $248. 11 12 Petitioner requested relief under section 6015 13 from liability from 2009 income tax. Respondent granted 14 relief with respect to the underpayment of tax reported on 15 petitioner's and her ex-husband's joint 2009 return. 16 Respondent denied relief with respect to the $4, 749 17 deficiency. On February 27, 2017, respondent issued a 18 19 final determination with respect to petitioner's section 6015 claim. On May 8, 2017, petitioner filed a timely 20 petition with this Court. 21 22 Opinion Generally, married taxpayers may elect to file a 23 joint Federal income tax return. Sec. 6013(a). After 24 making this election, each spouse generally is jointly and 25 severally liable for the entire tax due for that taxable (973)406-2250|operationsøescrbers.net|www.escribersmet 7 year. Sec. 6013(d)(3); Butler v. Commissioner, 114 T.C. 276, 282 (2000). A requesting spouse, however, may seek relief from joint and several liability under section 6015(b) or, if eligible, may allocate liability under section 6015(c). Sec. 6015(a). If relief is not available under subsection (b) or (c), a requesting spouse may seek equitable relief under subsection (f). The parties agree that relief is not available under subsection (b) or (c). 1 2 3 4 5 6 7 8 9 10 This Court has jurisdiction over this case 11 pursuant to section 6015(e)(1). We apply a de novo 12 13 standard and scope of review to cases under section 6015(f), and petitioner bears the burden of proof. See, 14 e.g., Wilson v. Commissioner, 705 F.3d 980 (9th Cir. 15 16 17 2013), aff'g T.C. Memo. 2010-134; Porter v. Commissioner, 132 T.C. 203 (2009); Porter v. Commissioner, 130 T.C. 115 (2008). Section 6015(f)(1) gives the Commissioner 18 discretion to grant equitable relief from joint and 19 several liability if, "taking into account all the facts 20 and circumstances, it is inequitable to hold the 21 22 23 24 25 individual liable for any unpaid tax or any deficiency (or any portion of either)". As respondent has conceded that the $9 of interest is immaterial to this case, the sole issue for decision is whether petitioner is entitled to relief under section 6015(f) from liability for the i cribers (973)406-2250loperationseescribers.net|www.esaibetsmet 8 1 2 3 4 5 6 8 10 11 12 13 14 15 16 17 18 portion of the deficiency attributable to unreported income on the TD Ameritrade account. The Commissioner has outlined procedures for determining whether a requesting spouse qualifies for equitable relief under section 6015(f) from joint and several liability. We consult these procedures when reviewing the Commissioner's denial of relief, but we are not bound by them as our analysis and determination ultimately turn on an evaluation of all the facts and circumstances. E.g., Heedram v. Commissioner, T.C. Memo 2018-25, at *6. These procedures, set forth in Rev. Proc. 2013- 34, sec. 4.01, 2013-43 I.R.B. 397, 399, outline threshold conditions that a spouse must generally meet to qualify for relief under section 6015 (f) . Respondent contends that petitioner fails to meet only the last of the threshold conditions; namely, that the income tax liability from which the requesting spouse seeks relief is 19 attributable to an item of the nonrequesting spouse. 20 21 22 23 24 There is an exception to this requirement, however: Under Rev. Proc. 2013-34, sec. 4.01(7) (b), if the item is titled in the name of the requesting spouse, the item is presumptively attributable to the requesting spouse, but this presumption is rebuttable. Petitioner 25 claims that Mr. Aghakhani purchased stocks and bonds in (973)406-2250|operationseescribers.net|www.escribetsmet 9 1 2 3 5 6 8 9 10 11 the TD Ameritrade account using petitioner's name and Social Security number, but without her knowledge or consent. On this basis, petitioner claims that the associated unreported income was attributable to her ex- husband and not to herself. On the basis of petitioner's credible testimony and the preponderance of evidence in the record, we find that she was not aware of the contents or activity within the TD Ameritrade account during 2009 and did not otherwise act as if she were the owner of the account. We also find that she did not have control of the account 12 until after her divorce, and that when she obtained 13 14 15 control of the account, it contained only a negligible amount of money. Respondent argues that, because at least some of 16 the money used to fund the Ameritrade account came from 17 petitioner ' s Bank of America account, she ought to have 18 known about the Ameritrade account, its contents, and its 19 activity. But, as we have found, Mr. Aghakhani controlled 20 their finances during their marriage, including her bank account. 21 22 Considering these facts, we find that the 23 unreported income associated with the TD Ameritrade 24 25 account was not attributable to petitioner. Accordingly, the threshold conditions for relief under section 6015(f) Cribers (973)406-2250|operations0escribersnetlwww.escribersaet 10 1 2 3 4 5 6 8 are met. Under Rev. Proc. 2013-34, sec. 4.03, 2013-43 I.R.B. at 400-403, the following nonexclusive factors are relevant to determining whether to grant equitable relief: (1) whether the requesting spouse remains married to the nonrequesting spouse; (2) whether failing to grant relief will cause economic hardship to the requesting spouse; (3) whether the requesting spouse knew or had reason to know of the item giving rise to the understatement or 10 deficiency as of the date the joint return was filed; (4) 11 whether the requesting spouse is under legal obligation to 12 13 14 15 16 17 pay the liability; (5) whether the requesting spouse received a significant benefit from the unpaid liability or understatement; (6) whether the requesting spouse is in compliance with tax laws; and (7) whether the requesting spouse is or has been in poor mental or physical health. Marital status: Respondent agrees that 18 petitioner is divorced. This factor weighs in favor of 19 20 Economic hardship: The record is quite unclear, 21 but it would appear that this factor weighs weakly in 22 23 24 favor of petitioner. Under Rev. Proc. 2013-34, sec. 4.03(2) (b), this factor will weigh in favor of relief if the requesting spouse ' s income is below 250% of the 25 Federal poverty guidelines, unless the requesting spouse } (973)406-2250|operationsOescribers.net|www.esalbers.net 1 2 3 4 5 6 8 has assets out of which the requesting spouse can make payments towards the tax liability and still adequately meet the requesting spouse's reasonable basic living 11 expenses. We take judicial notice that the 2018 (yearly) poverty line is $12,140 for one person. Petitioner's monthly income (not counting child support payments from Mr. Aghakhani) is, at most, $2, 300, which is less than $2, 529, that is, 250% of the Federal poverty line for 2018 10 divided by 12. Respondent has not asserted that 11 petitioner owns assets which she could use to pay this 12 13 liability. Therefore, leaving aside expenses attributable to petitioner's son (which may or may not be paid by Mr. 14 Aghakhani) , petitioner is below 250% of the Federal 15 poverty line.. 16 For these reasons we conclude this factor weighs 17 weakly in favor of relief. But even if we were to assume, 18 19 20 21 22 23 for the sake of argument, that this factor favors respondent, we would similarly conclude that it favors respondent only weakly, and we would still conclude that the factors, taken in their totality, favor petitioner. Knowledge or reason to know: As described, we have already found that petitioner did not know or have 24 reason to know about the TD Ameritrade account. This 25 factor weighs in favor of relief. EM (973}406-2250|operationseestrhers.net|www.escribers.net Legal obligation: Under Rev. Proc. 2013-34, 12 sec. 4.03(2) (d), a legal obligation for purposes of this factor is an obligation arising from a divorce decree or other legally binding agreement. Under the divorce agreement, Mr. Aghakhani is liable to pay the liability at issue. This factor favors relief. Respondent claims that Mr. Aghakhani' s bankruptcy means that this factor does not favor relief. Rev. Proc. 2013-34, sec. 4.03(2) (d), states, however, that: "The fact that the nonrequesting spouse has been relieved of liability for the taxes at issue a.s a result 1 2 3 5 6 8 9 10 11 12 of a discharge in bankruptcy is disregarded in determining 13 whether the requesting spouse has the sole legal 14 obligation. " 15 16 17 18 Significant benefit: Petitioner has not made any withdrawals from the TD Ameritrade account, which now contains a negligible amount. Nothing in the record suggests that petitioner benefitted from the 19 understatement at issue in any way. This factor favors 20 21 Compliance with income tax laws: There is 22 nothing in the record with respect to this factor. While 23 it is not clear whether petitioner is in compliance, it is 24 also not clear, in light of her income, whether she has a 25 filing requirement. This factor is neutral. } cribers (973}406-2250|operationseescréevs.netlwww.escribers.net Health: There is nothing in the record 13 concerning this factor. This factor is therefore neutral. As all factors either favor relief or are neutral, we find that petitioner is entitled to relief under section 6015(f). Decision will be entered for petitioner. This concludes the Court's findings of fact and opinion in this case. (Whereupon, at 5:34 p.m., the above-entitled matter was concluded.) 1 2 3 5 6 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 73)406-2250|operationsoestrazers.net|www.escribers.net