TAX COURT OPINION

Case: Gillian Lezama Murugappan
Docket Number: 22780-07
Judge: Colvin
Opinion Type: bench
Filed: 01/07/2010
Pages: 7

UNITED STATES TAX COURT WASHINGTON , D.C. 20217 GILLIAN LEZAMA MURUGAPPAN , Petitioner , V . COMMISSIONER OF INTERNAL REVENUE , Respondent : Docket Nos . 8842-07 22780-0 7 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 to petitioner and to respondent a copy of the pages of the transcript of the proceedings of the above case before Judge Diane L . Kroupa at Houston, Texas, on December 3, 2009, containing her oral findings of fact and opinion . In accordance with the oral findings of fact and opinion, decision will be entered for respondent in each of the above consolidated cases . (Signed) Diane L. Kroupa Judg e Date : Washington, D .C . January 7, 2010 SERVED 'JAI -9 2010 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 2 Bench Opinion by Judge Diane L . Kroup a December 3, 200 9 Murugappan v . Commissione r Docket Nos . 8.842-07, 22780-0 7 THE COURT : THE COURT HAS DECIDED TO RENDE R ORAL FINDINGS OF FACT AND OPINION IN THES E CONSOLIDATED CASES, AND THE FOLLOWING REPRESENTS TH E COURT'S ORAL FINDINGS OF FACT AND OPINION . THESE ORAL FINDINGS OF FACT AND OPINION SHALL NOT BE RELIED UPO N AS PRECEDENT IN ANY OTHER CASE . This bench opinion is made pursuant to th e authority granted by section 7459(b) and Rule 152 . All section references are to the Internal Revenu e Code for 2003 and 2004, which years shall b e collectively referred to as the years at issue, and all Rule references are to the Tax Court Rules o f Practice and Procedure . Gillian Murugappan appeared pro se . Susan Fenner and Randall Durfee appeared on behalf o f Respondent . FINDINGS OF FACT AND OPINIO N Certain facts have been stipulated . The stipulation of facts and the supplemental stipulatio n of facts the parties filed, with accompanyin g exhibits, are incorporated by this reference . The Heritage Reporting Corporation (202) 628-4888 3 1 facts are so found . Petitioner resided in Texas a t 2 the time she filed the petition in these consolidated 3 cases . 4 Petitioner and her ex-husband were marrie d 5 for eight years and had a child, . They met in Trinidad 6 when they were both expatriates working for oi l 7 companies . Petitioner is from Trinidad and Tobago, an 8 island north of Venezuela in the Caribbean, and he r 9 husband was from England . She is a databas e 10 administrator and her husband is a petroleum engineer . 11 They moved to the United States and, in 1999, the y 12 started an internet business selling blinds . One of 13 the two internet sites they created proclaimed that 14 they had been selling bamboo products for many years 15 primarily in the overseas markets and also locally in 16 Houston . It further stated that they were exporting 17 bamboo products to 14 countries and planning to expand 18 to five more countries in 2004 . 19 Petitioner and her husband had an accoun t 20 with Total Merchant Services that processed the credit 21 card sales made from selling the blinds . The gros s 22 receipts from the sales were deposited into a Wells 23 Fargo business account in Petitioner's and he r 24 husband's name . Petitioner wrote checks on th e 25 business account and deposited checks with respect to Heritage Reporting Corporatio n (202) 628-4888 4 1 the business . Petitioner knew the business did over 2 $20,000 a month of business and that the join t 3 business account had a balance exceeding $75,000 at 4 any point in time during the years at issue . 5 Petitioner's then-husband was a jet-setter 6 who loved to travel . During the years at issu e 7 Petitioner's then-husband spent very little time in 8 Houston or the United States . They divorced in 2005, 9 which is after the years at issue . 10 The record conflicts with Petitioner' s 11 testimony . The exhibits show that Petitioner was the 12 owner of the business and that she had access to the 13 joint business accounts . Petitioner now asserts , 14 however, that, unlike the information she provided to 15 the revenue agent, she was the owner in name only . In 16 addition, unlike the specific information she provided 17 to the revenue agent, Petitioner testified that sh e 18 only once went to the airport to pick up blinds and 19 that only once she hired day workers to deliver or 20 customize the blinds for customers . Also now a t 21 trial, Petitioner testified, contrary to the record, 22 that the business income is not hers but is income 23 solely of her husband . She also testified, contrary 24 to the record, that she did not input the data t o 25 prepare the return for the years at issue . By her own Heritage Reporting Corporatio n (202) 628-4888 5 1 submission, however, Petitioner stated "she use d 2 online tax programs to complete the taxes ." She now 3 asserts that she had no involvement with preparing the 4 returns . We find this hard to believe . We note that 5 the returns in question reported information that only 6 she would know . She now asserts that her husban d 7 prepared the returns and apparently signed the returns 8 on her behalf . She expects the Court to believe that 9 she trusted her husband to file the returns eve n 10 though she knew at the time that he was cheating on 11 her . This we cannot do . Nor do we believe that an 12 educated person such as Petitioner would simply follow 13 her husband's direction on what needed to be done in 14 the United States for the business to be as successful 15 as it was . By her own admission, her husband was not 16 in the United States during the years at issue . W e 17 refuse to turn a blind eye to the realities . 18 Petitioner cannot hide behind the virtual existence of 19 the business . 20 She was the registered and legal owner of 21 the business . During examination, she provided all 22 records for the income and expenses of the business . 23 It was this business that was audited and it was her 24 explanations that entitled the business to the truck 25 . and home office expenses that Respondent allowed . Sh e Heritage Reporting Corporation (202) 628-4888 6 1 answered all the questions to the revenue agent using 2 "I" instead of answering on behalf of her husband . 3 For example, she explained the breakdown of th e 4 business on Exhibit 7-J that this shows "the sale s 5 plus the credits that I had to give to customers," not 6 that her husband had to give to the customers . I n 7 addition, she stated that "I had to do utility work" 8 to justify the claimed utility expenses for th e 9 business . 10 Respondent determined preliminarily that 11 Petitioner is not eligible for relief under Section 12 6015 . Nothing changed after Petitioner submitted a 13 statement of disagreement with Respondent . Petitioner 14 filed the petition asserting that Respondent abuse d 15 his discretion in denying her relief under Section 16 6015 for the tax liabilities attributable to the 17 business . 18 It is well-established that marrie d 19 taxpayers may elect to fine a joint Federal income tax 20 return with his or her spouse . Sec . 6013(a) . Each 21 spouse filing the return is jointly and severally 22 liable for the entire tax shown on the return or 23 otherwise determined to be due . Sec . 6013(d)(3) ; 24 Cheshire v . Commissioner , 115 T .C . 183, 188 (2000), 25 affd . 282 F .3d 326 (5th Cir . 2002) . While a taxpaye r Heritage Reporting Corporation (202) 628-4888 7 1 may seek relief from joint liability under Section 2 6015, none of the conditions for relief apply t o 3 Petitioner to be absolved from the tax liabilitie s 4 attributable to the business . If Petitioner believes 5 that the tax liabilities are attributable to he r 6 husband alone, she needs to go after her ex-husband . 7 She is not entitled to relief from the IRS . For the 8 reasons already stated, we agree with Respondent that 9 nothing in the record or from trial convinces us tha t 10 Petitioner is entitled to relief under Section 6015 11 for either of the years at issue . We further fin d 12 that holding her liable for the tax liabilities is not 13 inequitable considering all the facts an d 14 circumstances of this case . We shall issue a decision 15 for Respondent in each of these consolidated cases . 16 THIS CONCLUDES THE COURT'S ORAL FINDINGS OF 17 FACT AND OPINION IN EACH OF THESE CONSOLIDATED CASES . 18 (Whereupon, at 2 :40 p .m ., the bench opinion 19 in the above-entitled matter was concluded . ) 20 21 22 23 2 4 25 Heritage Reporting Corporation (202) 628-4888