t c summary opinion united_states tax_court angela lee sloan petitioner v commissioner of internal revenue respondent docket no 3529-08s filed date angela lee sloan pro_se mark h pfeffer for respondent dean special_trial_judge this case was heard pursuant to the provisions of sec_7463 of the internal_revenue_code in effect when the petition was filed pursuant to sec_7463 the decision to be entered is not reviewable by any other court and this opinion shall not be treated as precedent for any other case unless otherwise indicated subsequent section references are to the internal_revenue_code in effect for the year in issue and all rule references are to the tax_court rules_of_practice and procedure for respondent determined a deficiency of dollar_figure in petitioner’s federal_income_tax the issues for decision1 are whether respondent properly disallowed petitioner’s claimed business_expenses as a musician vocalist and actress musician business and as a services musician vocalist band business whether respondent properly disallowed petitioner’s claimed deduction for the business use of her home and whether petitioner is a statutory_employee pursuant to sec_3121 background some of the facts have been stipulated and are so found the stipulation of facts and the exhibits received into evidence are incorporated herein by reference when petitioner filed her petition she resided in california in date petitioner timely filed a form_1040 u s individual_income_tax_return for on one schedule c profit or loss from business she reported expenses of dollar_figure from her musician business on a second schedule c she reported 1petitioner conceded that she failed to report dollar_figure in wage income 2this schedule c included deductions for expenses of dollar_figure for depreciation and sec_179 expenses dollar_figure for other expenses and dollar_figure for the business use of her home expenses of dollar_figure from her band business she did not report income from either her musician business or her band business on schedule a itemized_deductions petitioner reported business_expenses associated with her sales position for clear channel communications clear channel she now contends that she is a statutory_employee and is entitled to deduct those expenses on schedule c on date respondent issued petitioner a notice_of_deficiency disallowing the deductions claimed on her schedules c petitioner has worked as a sales representative4 representative for clear channel since as a representative petitioner spends over percent of her time outside of the office selling and marketing on-air media time5 to prospective clients she uses her personal cell phone and vehicle to solicit and serve clients and she occasionally 3this schedule c included deductions for expenses of dollar_figure for repairs and maintenance dollar_figure for supplies and dollar_figure for other expenses 4although it is unclear whether petitioner is an account executive or a sales representative her job title has no bearing on the decision of the court 5on-air media advertising consists of radio internet and other nontraditional advertising purchases gifts and meals for her clients expenses for which clear channel does not reimburse her clear channel provides petitioner with a work space furnished with a desk a computer and a phone and hires personnel to assist petitioner clear channel also provides health and dental insurance and contributes to petitioner’s sec_401 retirement_plan although petitioner is required to recruit her own clients clear channel occasionally provides representatives with customer leads and existing client accounts i burden_of_proof discussion generally the commissioner’s determinations in a notice_of_deficiency are presumed correct and the taxpayer has the burden of proving that those determinations are erroneous see rule a 290_us_111 in certain circumstances however sec_7491 places the burden_of_proof on the commissioner petitioner has not alleged that sec_7491 is applicable nor has she established compliance with the requirements of sec_7491 therefore the burden_of_proof does not shift to respondent 6clear channel’s general policy in was not to reimburse employees for expenses ii claimed business_expense deductions deductions are strictly a matter of legislative grace and taxpayers must satisfy the specific requirements for any deduction claimed see 503_us_79 292_us_435 taxpayers bear the burden of substantiating the amount and purpose of any claimed deduction see 65_tc_87 affd per curiam 540_f2d_821 5th cir a business use of home as a general_rule sec_280a denies deductions with respect to the use of a dwelling_unit that was used by the taxpayer as a residence during the taxable_year but sec_280a permits the deduction of expenses allocable to a portion of the dwelling_unit that was used exclusively and regularly as the principal_place_of_business for the taxpayer’s trade_or_business sec_280a limits the allowable deduction of expenses related to the trade_or_business use of a residence to the excess of the gross_income derived from the trade_or_business use for the year over the sum of certain deductions allocable to such income petitioner claimed a deduction for the business use of her home on the schedule c for her musician business pursuant to sec_280a she is entitled to deduct expenses from the business use of her home only to the extent the income from her musician business exceeds allowable deductions petitioner did not report any income from her business or otherwise demonstrate probable receipt of income she therefore is not entitled to deduct expenses for the business use of her home for and the court sustains respondent’s disallowance b schedule c expenses sec_162 allows a deduction for all ordinary and necessary expenses paid_or_incurred by a taxpayer in carrying on any trade_or_business an expense is considered ordinary if commonly or frequently incurred in the trade_or_business of the taxpayer 308_us_488 an expense is necessary if it is appropriate or helpful in carrying on a taxpayer’s trade_or_business 320_us_467 welch v helvering supra pincite a taxpayer must maintain records sufficient to substantiate the amounts of the deductions claimed sec_1_6001-1 income_tax regs if a taxpayer establishes that an expense is deductible but is unable to substantiate the precise amount we may estimate the amount bearing heavily against the taxpayer whose inexactitude is of his own making 39_f2d_540 2d cir the taxpayer must present sufficient evidence for the court to form an estimate because without such a basis any allowance would amount to unguided largesse 245_f2d_559 5th cir 85_tc_731 petitioner asserts that she engaged in her band and musician businesses for profit but respondent’s dispute concerns whether petitioner has substantiated her claimed business_expenses not whether she engaged in these activities for profit thus the court need address only whether petitioner substantiated her business_expenses petitioner did not testify as to her claimed business_expenses and failed to present any credible_evidence to substantiate expenses for either her musician or her band business she also did not provide the court with sufficient evidence to permit an estimate of the expenses respondent’s determination is sustained iii petitioner’s employment status adjusted_gross_income generally consists of gross_income less trade_or_business_expenses except in the case of the performance of services by an employee sec_62 with exceptions not relevant here an individual performing services as an employee may deduct expenses_incurred in the performance of services as an employee only as miscellaneous_itemized_deductions on schedule a and then only to the extent such expenses exceed percent of the individual’s adjusted_gross_income sec_63 d a and b petitioner claims that she is not an employee and relies on sec_3508 and sec_3121 a petitioner’s employment status under sec_3508 sec_3508 affords nonemployee status to certain statutorily defined classes of activities including those of a direct_seller a direct_seller is a person engaged in the trade_or_business of either selling consumer products in the home as opposed to a permanent retail establishment or delivering or distributing newspapers or shopping news sec_3508 sec_3508 also requires that the person receive remuneration related to sales rather than to the number of hours worked finally sec_3508 requires that the person perform services pursuant to a written contract that provides that the person is not treated as an employee with respect to those services for federal tax purposes although substantially_all the remuneration petitioner received is directly related to sales rather than to the number of hours worked she does not satisfy the requirements of sec_3508 or c petitioner does not sell consumer products or deliver newspapers and she did not provide evidence of a contractual agreement with clear channel indicating that she would not be treated as an employee for federal tax purposes accordingly she is not entitled to report deductions on schedule c under sec_3508 b petitioner’s employment status under sec_3121 an individual who is a statutory_employee under sec_3121 is not an employee for purposes of sec_62 and sec_67 and is not subject_to the sec_67 2-percent limitation for expenses_incurred by such employee in the performance of services as an employee 117_tc_263 prouty v commissioner tcmemo_2002_175 an employee for employment_tax purposes is defined by sec_3121 as follows sec_3121 employee --for purposes of this chapter the term employee means- any officer of a corporation or any individual who under the usual common_law rules applicable in determining the employer-employee relationship has the status of an employee or any individual other than an individual who is an employee under paragraph or who performs services for remuneration for any person d as a traveling or city salesman other than as an agent-driver or commission- driver engaged upon a full-time basis in the solicitation on behalf of and the transmission to his principal except for side-line sales activities on behalf of some other person of orders from wholesalers retailers contractors or operators of hotels restaurants or other similar establishments for merchandise for resale or supplies for use in their business operations if the contract_of_service contemplates that substantially_all of such services are to be performed personally by such individual except that an individual shall not be included in the term employee under the provisions of this paragraph if such individual has a substantial investment in facilities used in connection with the performance of such services other than in facilities for transportation petitioner asserts that she meets the statutory exception under sec_3121 respondent alleges that petitioner’s working relationship with clear channel is that of a common_law_employee and that the character of the product petitioner sells and the character of her customers do not meet the exception described in sec_3121 sec_3121 defines a salesperson as engaged in the sale of merchandise for resale or in the sale of supplies for use in their business operations petitioner does not sell merchandise rather petitioner sells advertising time furthermore her clients purchase air time not for resale or for use as a supply in their business operations but to advertise their products and services additionally on schedules c businesses deduct advertising expenses separately from goods and 7petitioner does not allege that she is a statutory_employee under sec_3121 b or c supply expenses providing further evidence that air time is not merchandise as contemplated under sec_3121 petitioner’s employment does not fall within the definition of a traveling or city salesperson under sec_3121 and the evidence shows that she is a common_law_employee under sec_3121 whether an individual is a common_law_employee under sec_3121 is a question of fact 89_tc_225 affd 862_f2d_751 9th cir 64_tc_974 among the relevant factors in determining the substance of an employment relationship are the following the degree of control exercised by the principal over the details of the work the taxpayer’s investment in facilities the taxpayer’s opportunity for profit or loss permanency of the relationship between the parties the principal’s right of discharge whether the work performed is an integral part of the principal’s business what relationship the parties believe they are creating and the provision of employee_benefits nlrb v united ins co 390_us_254 721_f2d_979 4th cir simpson v commissioner supra pincite- sec_31_3121_d_-1 employment_tax regs setting forth criteria for identifying common_law employees no one factor is determinative cmty for creative non-violence v reid 490_us_730 instead all the incidents of the relationship must be assessed and weighted nlrb v united ins co supra pincite simpson v commissioner supra pincite the factors should not be weighted equally but should be weighted according to their significance in the particular case 980_f2d_857 2d cir matt v commissioner tcmemo_1990_209 the control factor is the crucial test to determine the nature of a working relationship weber v commissioner 103_tc_378 affd per curiam 60_f3d_1104 4th cir both the control exercised by the alleged employer and the degree to which the alleged employer may intervene to impose control must be examined id pincite to retain the requisite control_over the details of an individual’s work the employer need not stand over the individual and direct every move it is sufficient that the employer has the right to do so id pincite 69_tc_1055 although petitioner is solely responsible for soliciting clients and collecting commissions clear channel establishes her duties sets performance goals and provides sales training consistent with clear channel procedures petitioner also has a manager who oversees and supervises her performance if her performance is unsatisfactory clear channel may terminate her employment petitioner is also required to submit reports of her client accounts for evaluation submit a weekly timecard reflecting hours worked and request permission for time off the foregoing facts indicate that petitioner works under the direction and control of clear channel additionally although petitioner is compensated solely on commission she does not purchase or own the air time she sells making her risk of loss negligible at best it is apparent that clear channel considers petitioner a common_law_employee clear channel withholds federal income taxes fica_taxes and medicare taxes and does not issue petitioner a form_1099 the withholding of taxes is consistent with a finding that petitioner is a common_law_employee see 63_tc_621 petitioner also receives health and dental insurance participates in a sec_401 retirement_plan and accrues sick leave and vacation time lastly the record reflects that petitioner has little or no investment in facilities or equipment beyond the use of her personal computer cell phone and vehicle clear channel 8petitioner’s form_w-2 wage and tax statement for was not attached to her federal_income_tax return provides a work space furnished with a desk a computer and a phone and hires personnel to assist petitioner none of the relevant factors discussed above support petitioner’s position considering the record and all the facts and circumstances the court concludes that petitioner is a common_law_employee under sec_3121 and is not a statutory_employee under sec_3121 other arguments made by the parties and not discussed herein were considered and rejected as irrelevant without merit or moot to reflect the foregoing decision will be entered for respondent


tak exempt and government entities bizision department of the treasury internal_revenue_service washington dc feb - s elt ep ra al re taxpayer dear this letter constitutes notice that approval has been granted for your request for a 5-year automatic_extension for amortizing the unfunded liabilities as of date for the above-named plan which are described in sec_431 and sec_431 of the internal_revenue_code code and sec_304 and sec_304 of the employee_retirement_income_security_act_of_1974 erisa this extension is effective with the plan_year beginning date this extension applies to the amortization charge bases as identified in your application submission established as of date with a total outstanding balance of dollar_figure as of that date the extension of the amortization periods of the unfunded liabilities of the plan was granted in accordance with sec_431 of the code sec_431 of the code requires the secretary to extend the period of time required to amortize any unfunded_liability of a plan for a period of time not in excess of years if the plan submits an application meeting the criteria stated in sec_431 the plan has submitted the required information to meet the criteria in sec_431 including a certification from the plan’s actuary that i absent the extension under subparagraph a the plan would have an accumulated_funding_deficiency in the current plan_year or any of the succeeding pian years ii the plan_sponsor has adopted a plan to improve the plan's funding status iii the plan is projected to have sufficient assets to timely pay expected benefits and anticipated expenditures over the amortization period as extended and iv the notice required under paragraph a has been provided we have sent a copy of this letter to the and to the this ruling is directed only to the taxpayer that requested it sec_6110 of the internal_revenue_code provides that it may not be used or cited by others as precedent if you require further assistance in this matter please contact sincerely yours david m ziegler manager ep actuarial group


internal_revenue_service department of the treasury washington oc contact person telephone number in reference to t ep ra t1 date nay on index no ein legend state a employer m plan a plan b plan c gentlemen in response to your ruling_request dated may this is concerning the federal_income_tax treatment under sec_414 of the internal_revenue_code code of certain contributions to plans a b and c the following facts and representations have been submitted employer m is a political_subdivision of state a plan a statewide defined_benefit_plan maintained by a which is state a purpose of providing retirement and certain other_benefits to public employees was created under the law of state a for the during employer m adopted an ordinance permitting employer m to pick up the required contributions of its employees who are members of plan a since date the law of state a has permitted participants of plan a to purchase certain additional service_credit and redeposit withdrawn contributions by payroll reduction and have the amounts designated by the employer as contributions paid_by the employer pursuant to sec_414 of the code the participants must complete a binding irrevocable payroll reduction authorization form o204 in order that employees can purchase additional service_credit or redeposit withdrawn contributions by payroll reduction contributions that are picked up by the employer employer m will adopt a proposed ordinance providing that employees may purchase additional service_credit and redeposit withdrawn contributions by payroll reduction employees may not increase or decrease such payroll reduction employees may not terminate the payroll reduction unless they terminate employment or all such credit has been purchased employees may not make a partial payment and employer m will not decrease increase or terminate the payroll deduction unless the employee's employment has terminated or all such credit has been purchased additionally the proposed ordinance provides that the contributions are being paid_by the employer in lieu of contributions by the employee have the option of choosing to receive the contributed amounts directly instead of having them paid_by the employer to the pension_plan and employee to have employer m pick up such contributions will be binding and irrevocable the employee does not the election by an based on the facts and representations above you request the following rulings the payroll reduction contributions used to purchase additional service_credit and to redeposit withdrawn contributions will be treated as employer contributions picked up by the city within the meaning of sec_414 purposes and will not be taxable to the employee until of the code for federal_income_tax 20s a distribution and constitute wages under sec_3401 a the payroll reduction contributions will not of the code sec_414 of the code provides that contributions otherwise designated as employee contributions shall be treated as employer contributions if such contributions are made to a plan described in sec_401 established by a state government or a political_subdivision thereof and are picked up by the employing unit the federal_income_tax treatment to be accorded in that revenue contributions which are picked up by the employer within the meaning of sec_414 of the code is specified in revrul_77_462 c b ruling the employer school district agreed to assume and pay the amounts employees were required by state law to contribute to a state pension_plan revrul_77_462 concluded that the school district's picked-up contributions to the plan are excluded from the employees’ gross_income until such time as they are distributed to the employees the revenue_ruling held further that under the provisions of sec_3401 school district's contributions to the plan are excluded from wages for purposes of the collection of income_tax at source on wages therefore no withholding is required from the employees' salaries with respect to such picked-up contributions a a of the code the the issue of whether contributions have been picked up by an employer within the meaning of sec_414 of the code is addressed in revrul_81_35 1981_1_cb_255 and revrul_81_36 1981_1_cb_255 revenue rulings established that the following two criteria must be met contributions although designated as employee contributions are being paid_by the employer in lieu of contributions by the employee and the employee must not be given the option of choosing to receive the contributed amounts directly instead of having them paid_by the employer to the pension_plan the employer must specify that the these furthermore it is c20b immaterial for purposes of the applicability of sec_414 whether an employer picks up contributions through a reduction in salary an offset against future salary increases or a combination of both revrul_87_10 1987_1_cb_136 provides that in order to satisfy revenue rulings and the required specification of designated employee contributions must be completed before the period to which such contributions relate thus employees may not exclude from current gross_income designated employee contributions to a qualified_plan that relate to compensation earned for services prior to the date of the last governmental action necessary to effect the employer pick up employer m proposes to adopt the ordinance described above to permit participants of plan a to elect to have such payroll reduction contributions for the purchase of additional service_credit or the redeposit of withdrawn contributions picked up by employer m ordinance provides that the participants will be required to complete a binding irrevocable payroll reduction authorization form if they so elect and they will not have the option of choosing to receive the contributed amounts directly instead of having them paid to plan a proposed ordinance further provides that the contributions although designated as employee contributions are being paid_by the employer in lieu of contributions by the employee the proposed the accordingly with respect to ruling_request one the payroll reduction contributions used to purchase additional service_credit and to redeposit withdrawn contributions will be treated as employer contributions picked up by employer m within the meaning of sec_414 code for federal_income_tax purposes of the regarding ruling_request two since the picked-up contributions are to be treated as employer contributions such contributions are excepted from wages as defined in sec_3401 a purposes of the code for federal_income_tax in accordance with revenue_ruling this ruling applies no earlier than the later of the date the ordinance is adopted or put into effect this ruling is based on the assumption that plan a will be qualified under sec_401 of the code at the time of the proposed contributions no opinion is expressed as to whether the amounts in question are subject_to tax under the federal_insurance_contributions_act expressed as to whether the amounts in question are being paid pursuant to a salary reduction agreement within the meaning of sec_3121 b no opinion is of the code this ruling is directed only to the taxpayer who requested it it may not be used or cited by others as precedent sec_6110 of the code provides that sincerely yours weegee ga swiece john swieca manager employee_plans technical group tax_exempt_and_government_entities_division enclosures deleted copy notice of intention to disclose a0


t c memo united_states tax_court eleanor simon petitioner v commissioner of internal revenue respondent docket no filed date jeffrey a collins for petitioner steven m webster for respondent memorandum findings_of_fact and opinion chiechi judge this case arises from a request for equita- ble relief relief under sec_6015 f with respect to peti- tioner’s taxable_year we must decide whether respondent abused respondent’s discretion in denying petitioner such relief we hold that respondent did not abuse respondent’s discretion 1all section references are to the internal_revenue_code in effect at all relevant times all rule references are to the tax_court rules_of_practice and procedure findings_of_fact some of the facts have been stipulated and are so found petitioner resided in greensboro north carolina at the time she filed the petition petitioner and javester simon mr simon both college graduates married on or about date separated on or about date and divorced on date the judgment of divorce granting petitioner and mr simon a divorce did not impose any obligation on petitioner or mr simon to pay any outstanding federal income or other tax_liabilities nor is there any other document relating to that divorce such as a property settlement that imposed any legal_obligation on peti- tioner or mr simon to pay any such liabilities although petitioner and mr simon divorced in date division of the marital assets remains to be adjudicated by the north carolina courts during the year at issue petitioner worked for guilford technical community college guilford college and mr simon worked for roadway express inc roadway express during that year petitioner and mr simon received wages of dollar_figure and dollar_figure respectively petitioner and mr simon signed on date and filed the signature form of form 1040pc format u s individual_income_tax_return for taxable_year return in the return they reported total wages of dollar_figure total interest of dollar_figure a retirement_plan distribution of dollar_figure total income of dollar_figure total_tax of dollar_figure total_tax payments of dollar_figure and tax due of dollar_figure petitioner and mr simon attached to the return forms w-2 wage and tax statement for that reported their respective wages of dollar_figure and dollar_figure and respective federal_income_tax tax withheld of dollar_figure and dollar_figure and form 1099r distributions from pensions annuities retirement or profit-sharing_plans iras insurance contracts etc for that reported a fully taxable gross retirement_plan distribution of dollar_figure to mr simon mr simon’s retirement_plan distribution by first union na- tional bank first union_ira department first union and tax withheld of dollar_figure the following jurat appeared immediately above the respective signatures of petitioner and mr simon on the return and immediately below inter alia the dollar_figure of tax shown due in that return under penalties of perjury i declare that i have examined this return and accompanying sched- ules and statements and to the best of my knowledge and belief they are true correct and complete 2robert l schroll signed the return as return pre- parer petitioner and mr simon did not remit with the return any payment of the tax shown due on date petitioner filed with the internal_revenue_service irs form_8857 request for innocent spouse relief petitioner’s form with respect to taxable_year at the request of the irs petitioner completed and submitted to the irs form 886-a innocent spouse questionnaire petitioner’s form 886-a in petitioner’s form 886-a peti- tioner provided the responses indicated to the following ques- tions with respect to the filing of the return if you are requesting relief from tax reported on the original return a did you review the tax_return before signing it i did not have an opportunity to review the re- turn my former husband--that sic the last minute--insisted that i sign the return immedi- ately so that he could mail the return before the deadline b at the time you signed the return were you aware there was a balance due irs please explain in detail no i was not aware of any balance due because i was not afforded the opportunity to review the return 3in petitioner’s form_8857 petitioner also sought relief under sec_6015 with respect to taxable_year in which mr simon received a retirement_plan distribution of dollar_figure from roadway express savings_plan mr simon’s retirement_plan distribution the irs granted petitioner partial relief with respect to and that year is not at issue in the instant case see infra note c describe how at the time you signed the return you and your spouse planned to pay the tax due i was unaware of any taxes due because i did not know that he had taken funds from his retirement d why did you file a joint_return instead of married filing separate we filed a joint_return for thirty-three years while living as husband and wife in petitioner’s form 886-a petitioner also alleged the following with respect to the filing of the return my former husband customarily had our return completed by h_r block the additional retirement income was reported when the form was given to me for my signa- ture my former husband insisted that i sign it quickly in order to allow him sufficient time to get to the post office in response to questions relating to the preparation of the return petitioner alleged in petitioner’s form 886-a that her only involvement with the preparation of that return was to give mr simon form_w-2 for that she received from guilford college in this connection petitioner further alleged in petitioner’s form 886-a that mr simon gathered the information for the preparation of the return and delivered it to the return preparer that she never accompanied mr simon when he brought that information to the return preparer and that mr simon retrieved the return from the return preparer after it was completed in response to questions relating to the existence of any joint bank accounts petitioner alleged in petitioner’s form a that during she and mr simon had separate not joint bank accounts that she did not review mr simon’s checkbook or bank statements that she did not open mail addressed to mr simon that she made payments for her automobile her clothing and certain unidentified food and furniture and that mr simon made payments for the mortgage utilities insurance and his clothing in response to a question relating to whether petitioner’s payment of the tax_liability for taxable_year unpaid liability would cause an economic hardship to her petitioner indicated that it would not however petitioner added that it would be grossly unfair because i received no economic benefit-- in fact i was not aware he withdrew these retirement_funds in response to a question asking for any other information in support of petitioner’s position that she is entitled to relief under sec_6015 with respect to taxable_year petitioner stated i have remarried since my divorce from mr simon and this is my reason for saying that if i had to pay it would not create an economic hardship although it would be quite difficult for me inasmuch as my former husband used the money the retirement distribu- tion entirely for himself and kept me totally unaware of its existence i feel it is only fair that he should accept the responsibility for paying the tax_liability he incurred in petitioner’s form 886-a petitioner did not claim that mr simon abused her during their marriage in considering petitioner’s form_8857 the irs found that petitioner made an error in calculating the amount of tax due for taxable_year that was shown in the return ie dollar_figure respondent determined that the correct amount of tax due for that year is dollar_figure of which dollar_figure and dollar_figure were attributable to mr simon and petitioner respectively on date the irs made a preliminary administra- tive determination irs date preliminary determina- tion with respect to petitioner’s form_8857 as pertinent here the irs date preliminary determination denied petitioner relief under sec_6015 with respect to taxable_year that preliminary determination stated in pertinent part sec_6015 claim liability arose on or after date joint_return is valid there is enough information to determine the claim no oic accepted eligibility factors underpayment_of_tax - relief is not available under sec_6015 sec_6015 filed a joint_return claim filed timely liability unpaid or paid_by the requesting spouse within the time period not a fraudulent return no fraudulent transfer of assets no disqualified assets transferred tier i factors full scope taxpayers are currently divorced widowed legally 4the irs date preliminary determination granted petitioner partial relief under sec_6015 with respect to taxable_year see supra note separated or they had been members of separate households prior to the claim for at least consecutive months can’t prove a belief that tax was to be paid explanation at this time and the previous year he had taken large amounts out of his ira this is the main cause of the balance due she didn’t examine the return to see tax was due tier i factors full scope not met for tier ii factors taxpayers are currently divorced widowed legally_separated or they had been members of separate households prior to the claim for at least consecutive months no economic hardship explanation no marital abuse no legal_obligation established the liability is not solely attributable to against the non-requesting spouse erroneous items per claimant against see allocation sheet using the percentage_method on the itemized_deduction means part is attributable to her knowledge background claimant - involvement claimant - college spouse - college spouse - she said she paid part of the bills but had no access to his individual accounts lifestyle changes spouse’s elusiveness duty to inquire living arrangements none known she said he took out the money and didn’t tell her no review of the return he said he rushed her and didn’t give her time she said separated but court papers say against the requesting spouse had knowledge or reason to know explanation when the return was filed there had been two years of large withdrawls from ira she didn’t review the return she didn’t do her duty to inquire had she reviewed the return and saw the ira withhdrawls she would have known something was going on no significant benefit gained in compliance with the tax laws explanation returns were filed however she is remarried and there is a ssa update showing for december of which would mean she should have filed married filing separate or joint in unique circumstances not meeting tier ii factors - deny claim tier ii consideration none based on the above facts it is equitable to hold the claimant liable for the balance she didn’t exam the return or question how it would be paid part is attributable to her she should have known there was a problem because of large ira withdrawls tier ii factors not met - deny claim ending statement reproduced literally tier i factors full scope not met tier ii factors not met - deny claim claim denied under sec_6015 - full scope claim denied under sec_6015 - full scope in a letter dated date petitioner’s date letter petitioner appealed to the irs appeals_office appeals_office the irs date preliminary determina- tion to deny her relief under sec_6015 with respect to taxable_year on date mr simon sent a letter mr simon’s date letter to the irs he attached to that letter form 1099r for that reported mr simon’s retirement_plan distribution of dollar_figure as fully taxable and various statements for the period april through date that first union prepared and sent to mr simon mr simon’s date letter stated in pertinent part i’m submitting this information from the tax_year and it is in regard to the stock certificate i received from caliber system and rolled over to a qualified ira somehow this information was passed on as cash the portion that i used in and was taxed and a penalty was assessed because i was not 59½ at the time of withdrawal the irs has been holding all my refunds while we have exchanged information i have received this paperwork from caliber systems roadway express and wachovia bank i hope this information will clear up the misunderstanding also i need you to submit a form to me i am no longer married and need my divorced wife exempt from this matter reproduced literally on date the appeals_office sent a letter to mr simon appeals_office date letter regarding petitioner’s appeal of the irs date preliminary determination the appeals_office date letter stated in pertinent part 5although mr simon’s date letter suggested that he was attaching to that letter paperwork from caliber systems roadway express and wachovia bank the only attach- ments to that letter that are part of the record in this case are those described above eleanor collins petitioner has requested relief from tax_liability as an innocent spouse for the tax years shown above if the irs grants relief this would relieve your spouse in whole or in part from having to pay the income_tax owed on these years our examination function denied the request eleanor collins then asked our appeals function to review the request we are contacting you to see if you have any additional information that you’d like to provide you may bene- fit from participating in this administrative appeal proceeding since we’ll make our decision based on all the information we receive should eleanor collins receive an innocent spouse classification the tax_liability in whole or in part will be yours alone i’m available to meet with you in an informal confer- ence if you’d like you can present your position at this conference you can also participate by sending us material and information that support your position because of our time frames in dealing with appeals i need to hear from you within the next days on date the appeals_office completed a document entitled appeals transmittal and case memo appeals_office memorandum that stated in pertinent part summary and recommendation does eleanor m simon qualify as an innocent spouse under sec_6015 for tax_year ending no the taxpayer does not qualify for relief as an innocent spouse for tax_year the amount of dollar_figure of the dollar_figure deficiency is allocable to the non-requesting spouse nrs however the cincinnati service_center disallowed the claim for relief in full because the taxpayer did not have a belief the tax would be paid in full at the time of signing the joint_return i sustain their determination 6sometime after petitioner and mr simon divorced peti- tioner remarried brief background the taxpayer filed a joint_return with her former husband javester simon for tax_year she al- leges she did not have an opportunity to review the return because her husband insisted she sign it immedi- ately so that he could mail it timely the taxpayer separated from her husband in or and divorced him in date the taxpayers filed their return with an underpay- ment of dollar_figure and included a large ira distribution on the return for such year discussion and analysis the taxpayer filed a request for innocent spouse re- lief form_8857 under sec_6015 c or f for since the cincinnati service_center allocated the entire deficiency to the nrs for and the taxpayer did not request appeal’s consideration for this year the discussion below is limited to the tax_year sec_6015 does the taxpayer meet the requirements of sec_6015 no the taxpayer does not qualify for relief under sec_6015 for tax_year there was no understate- ment of tax for this year sec_6015 does the taxpayer meet the requirements of sec_6015 no the taxpayer does not meet the requirements of sec_6015 there is no deficiency in tax allocable to the non-requesting spouse for the tax_liability is attributable solely to the underpayment_of_tax upon filing the tax_return plus interest and penalties sec_6015 sec_6015 provides the irs with the discretion to grant equitable relief where a taxpayer is not entitled to relief under either sec_6015 or c equitable relief under sec_6015 however is subject_to two limitations in accordance with - revenue proce- dure 2000_1_cb_447 sec_4 if the return has been adjusted to reflect an understatement relief will be available only to the extent of the liability shown on the return prior to the adjustment or if no adjustment is made relief is limited to the extent the unpaid liability is due to the non- requesting spouse explanation of sec_6015 in revproc_2000_15 the irs delineates quali- fications necessary to be granted equitable relief under sec_6015 threshold eligibility qualifica- tions are joint_return filed timely filed claim for relief relief not available under other sections of the statute there was no transfer of assets between spouses as part of a fraudulent scheme return was not filed with fraudulent intent on the part of the requesting spouse liability remains unpaid no disqualified assets transferred to requesting spouse if so relief only available to the ex- tent that the liability exceeds the value of the transferred assets nonetheless under section dollar_figure of revproc_2000_15 relief is still possible for requesting spouses who meet the threshold eligibility requirements above but do not otherwise qualify for relief under any other sections this last relief provision is only available where it would be inequitable to hold the requesting spouse liable for the understatement under this section equitable relief may be granted for underpayments after consideration of local factors tier or for underpayments and understatements after consideration of the centralized review factors tier if an underpayment does not qualify under the tier factors the tier factors should be considered all understatement and deficiency cases should consider the tier factors only equitable relief under the tier factors will ordi- narily be granted under sec_6015 if all of the follow- ing four local factors are met spouse is divorced separated widowed or lived apart of the months prior to the date request filed requesting spouse had a reasonable belief that the tax was paid or was going to be paid the time the spouse signed the return undue_hardship would result if equitable relief is not granted and the unpaid liability at issue is attributable to the non-requesting spouse the irs has authority to grant relief in circumstances where it is clearly inequitable to hold the requesting spouse liable for the tax and where a spouse had rea- sonable belief that the tax reported on his her return would be paid the use of tier factors however should be limited to those cases where it would be clearly inequitable to hold the requesting spouse liable for the tax does the taxpayer qualify for equitable relief under sec_6015 in my opinion no the taxpayer does not qualify for equitable relief when considering equitable relief the following fac- tors should be considered martial status economic hardship spousal abuse legal_obligation of non-requesting spouse no knowledge or reason to know liability attributable to non-requesting spouse of the above factors the ones in the taxpayer’s favor are marital status liability attributable to non-requesting spouse in my opinion these factors are outweighed by the fact this year was the second year of withdrawals from the nrs’s ira accounts the likelihood that she did not know of the withdrawals from beginning in that were included on the tax_return is diminished in the second year in addition the withdrawals were included in the income of the tax_return and the return clearly reflected a balance due in excess of dollar_figure it is clearly not believable that the tax- payer did not know of this liability due she further provided no evidence that she believed the tax would be paid at the time the tax_return was filed evaluation based on the above discussion the taxpayer has failed to show that she is entitled to relief under either sec_6015 or f i recommend that the determina- tion of the innocent spouse unit is sustained in reproduced literally also on date the appeals_office sent to petitioner a notice_of_determination concerning your request for relief from joint_and_several_liability under sec_6015 notice_of_determination in the notice_of_determination the appeals_office denied petitioner relief under sec_6015 with respect to taxable_year the notice_of_determination stated in pertinent part for you do not qualify for relief under sec_6015 or f reproduced literally as of the time of the trial in this case mr simon contin- ued to maintain that mr simon’s retirement_plan distribu- tion of dollar_figure is not income for and should not have been included in the return opinion we review respondent’s denial of relief under sec_6015 for abuse_of_discretion 114_tc_276 petitioner bears the burden of proving that respondent abused respondent’s discretion in denying that relief see 118_tc_106 affd 353_f3d_1181 10th cir sec_6015 grants respondent discretion to relieve an individual who files a joint_return from joint_and_several_liability with respect to that return that section provides sec_6015 equitable relief --under procedures prescribed by the secretary if-- taking into account all the facts and circumstances it is inequitable to hold the indi- vidual liable for any unpaid tax or any deficiency or any portion of either and 7the court’s jurisdiction in this case is dependent upon sec_6015 118_tc_494 see also 114_tc_324 114_tc_276 8we reject petitioner’s argument that respondent bears the burden of proving under sec_6015 that petitioner had knowl- edge that the tax shown due in the return would not be paid petitioner’s argument appears to confuse sec_6015 with sec_6015 respondent has the burden_of_proof under sec_6015 with respect to whether the requesting spouse had actual knowledge of the item giving rise to the deficiency 116_tc_189 relief is not available to such individ- ual under subsection b or c the secretary may relieve such individual of such liability in the instant case the parties agree that relief is not avail- able to petitioner under sec_6015 or c thereby satisfy- ing sec_6015 they disagree over whether petitioner is entitled to relief under sec_6015 in support of her position that she is entitled to relief under sec_6015 petitioner relies inter alia on the testimony of mr simon and her own testimony we found mr simon’s testimony to be questionable and not credible in certain material respects for example mr simon testified that he signed petitioner’s name on the return we did not believe that testimony we also found mr simon’s testimony to be at times confusing confused internally inconsistent and or inconsistent with certain of the parties’ stipulations of fact and certain exhibits attached to those stipulations stipulated exhibits we shall not rely on mr simon’s testimony to support petitioner’s position in this case we also found petitioner’s testimony to be questionable and not credible in certain material respects for example petitioner testified that she did not sign the return we did not believe that testimony moreover petitioner’s testimony that she did not sign the return is inconsistent with the parties’ stipulation that she did sign that return and certain stipulated exhibits in which she represented to the irs that she signed that return a stipula- tion is to be treated to the extent of its terms as a conclu- sive admission by the parties to the stipulation unless other- wise permitted by the court or agreed upon by those parties rule e the court will not permit a party to a stipulation to qualify change or contradict a stipulation in whole or in part except that it may do so where justice requires justice does not require the court to permit petitioner to contradict and attempt to change the parties’ stipulation that she signed the return we shall not rely on petitioner’s testimony to support her position in this case turning now to our consideration of sec_6015 as directed by that section respondent has prescribed procedures in revproc_2000_15 2000_1_cb_447 revenue_procedure that are to be used in determining whether it would be inequita- ble to find the requesting spouse liable for part or all of the 9we note that revproc_2003_61 2003_2_cb_296 revenue_procedure superseded revproc_2000_15 revproc_2003_61 is effective for requests for relief under sec_6015 which were filed on or after date and for requests for such relief which were pending on and for which no preliminary determination_letter had been issued as of that date id sec revproc_2003_61 is not applicable in the instant case that is because petitioner filed petitioner’s form_8857 on date and the irs issued a preliminary determination on date ie the irs septem- ber preliminary determination with respect to that form liability in question section dollar_figure of revproc_2000_15 lists seven conditions threshold conditions which must be satisfied before the irs will consider a request for relief under sec_6015 in the instant case respondent concedes that those conditions are satisfied where as here the requesting spouse satisfies the threshold conditions section dollar_figure of revproc_2000_15 provides that a requesting spouse may be relieved under sec_6015 of all or part of the liability in question if taking into account all the facts and circum- stances the irs determines that it would be inequitable to hold the requesting spouse liable for such liability where as here the requesting spouse satisfies the thresh- old conditions sec_4 of revproc_2000_15 sets forth the circumstances under which the irs ordinarily will grant relief to that spouse under sec_6015 in a case like the instant case where a liability is reported in a joint_return but not paid as pertinent here those circumstances which section dollar_figure of revproc_2000_15 and we refer to as elements are a at the time relief is requested the request- ing spouse is no longer married to the nonrequesting spouse b at the time the return was signed the re- questing spouse had no knowledge or reason to know that the tax would not be paid the requesting spouse must establish that it was reasonable for the requesting spouse to believe that the nonrequesting spouse would pay the reported liability and c the requesting spouse will suffer economic hardship if relief is not granted for purposes of this section the determination of whether a requesting spouse will suffer economic hardship will be made by the commissioner or the commissioner’s delegate and will be based on rules similar to those provided in sec_301_6343-1 of the regulations on procedure and administration rev_proc sec_4 c b pincite we shall hereinafter refer to the elements set forth in sec_4 a b and c of revproc_2000_15 as the marital status element the knowledge or reason to know element and the economic hardship element respectively sec_4 of revproc_2000_15 provides that relief granted under sec_4 of that revenue_procedure is subject_to the following limitations a if the return is or has been adjusted to reflect an understatement_of_tax relief will be avail- able only to the extent of the liability shown on the return prior to any such adjustment and b relief will only be available to the extent that the unpaid liability is allocable to the nonrequesting spouse turning to the three elements set forth in sec_4 of revproc_2000_15 the presence of which will ordi- narily result in a grant of relief under sec_6015 in the instant case respondent concedes that the marital status element is present the parties dispute whether the knowledge or reason to know element is present and petitioner concedes that the economic hardship element is not present in light of petitioner’s concession that the economic hardship element is not present petitioner does not qualify for relief under sec_4 of revproc_2000_15 the irs may nonetheless grant relief to petitioner under section dollar_figure of revproc_2000_15 that section provides a partial list of positive and negative factors which respondent is to take into account in considering whether to grant an individual relief under sec_6015 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 revproc_2000_15 sec_4 c b pincite as pertinent here sec_4 of revproc_2000_15 sets forth the following positive factors which weigh in favor of granting relief under sec_6015 a marital status the requesting spouse is divorced from the nonrequesting spouse b economic hardship the requesting spouse would suffer economic hardship within the meaning of sec_4 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 that the liability would not be paid 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 attrib- utable to the nonrequesting spouse we shall hereinafter refer to the positive factors set forth in sec_4 a b c d e and f of revproc_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 respec- tively we note initially that the parties do not dispute that the marital status positive factor the knowledge or reason to know positive factor and the economic hardship positive factor set forth in sec_4 a d and b respectively of revproc_2000_15 are the same as the marital status element the knowledge or reason to know element and the eco- nomic hardship element set forth in sec_4 a b and c respectively of that revenue_procedure with respect to the marital status positive factor set forth in sec_4 a of revproc_2000_15 respondent concedes that that factor is present in the instant case with respect to the economic hardship positive factor set forth in sec_4 b of revproc_2000_15 peti- tioner concedes that that factor is not present in the instant case with respect to the abuse positive factor set forth in sec_4 c of revproc_2000_15 petitioner concedes that that factor is not present in the instant case with respect to the knowledge or reason to know positive factor set forth in sec_4 d of revproc_2000_ the parties disagree over whether that factor is present in the instant case petitioner argues that the knowledge or reason to know positive factor is present in support of that argument petitioner asserts on brief petitioner has stated that during the spouses’ petitioner’s and mr simon’s year marriage she petitioner never had opportunity to examine the tax returns prior to filing and that she completely relied upon mr simon to handle the couple’s tax matters she has consistently stated that on the evening of the filing deadline mr simon always hurriedly presented a completed return to petitioner for her immediate signa- ture and upon that signature hurried to the post office to affect a timely mailing this position is clearly stated as part of the administrative record petitioner stated this same position at trial fur- ther the same position regarding in general the couple’s filing habit was supported by mr simon in his testimony at trial finally respondent in its determination even relied upon that same position of petitioner as its own basis for determining that petitioner should have known of the liability in fact as part of respon- dent’s administrative record the tax examiner actually stated that petitioner did not examine the return the tax examiner did not even consider whether petitioner actually inquired of payment of the tax instead the examiner based her determination on the rationale that petitioner should have known something was going on referring only to the liability itself there is no evidence that petitioner had actual knowledge of the underpayment it is not reasonable for petitioner to have known that the tax would not be paid all of the petitioner’s relevant evidence indicates that peti- tioner never even inquired about the tax prior to receiving respondent’s notice of unpaid liability further respondent has produced no evidence that petitioner inquired about the tax knowledge of the liability whether actual or constructive is not equal to knowledge of whether petitioner knew or should have known whether the tax would be paid it is not reasonable for petitioner to inquire about payment of an unknown underpayment if petitioner did not actually know about the underpayment itself the facts in this case are similar to those in wiest v commissioner t c memo in wiest as to equitable relief under sec_6015 the deter- mination letter provided that underpayment was evident at the signing of the joint_return the taxpayer would have had knowledge reason to know of the underpayment at the time of signing the tax_return the court held in wiest that respondent abused his discretion in denying relief under sec_6015 with respect to an amount of tax reported on petitioner’s joint_return but not paid reproduced literally respondent argues that the knowledge or reason to know positive factor is not present in the instant case in support of that argument respondent asserts on brief despite the fact that the text amount you owe dollar_figure was an inch above petitioner’s signature on the return she claimed ignorance that any_tax was owed if petitioner was unaware that tax was due she had a duty to inquire whether tax was owed this court has held that when taxpayers fail to fulfill their duty_of inquiry they are ordinarily charged with constructive knowledge of any understate- ments on their returns demirjian v commissioner tcmemo_2004_22 cohen v commissioner tcmemo_1987_537 accordingly having failed her duty_of inquiry petitioner is charged with constructive knowl- edge of the tax due on the return see castle v commissioner tcmemo_2002_142 n plaintiff sic presented no evidence to the irs on this factor knowledge or reason to know positive factor because she claimed that she was unaware that tax was due when the return was filed due to the absence of evidence at the administrative level this factor does not favor relief as argued above peti- tioner is held to have constructive knowledge of the tax due per return in further support of respondent’s argument that the knowledge or reason to know positive factor is not present in the instant case respondent asserts on brief petitioner argues that the determination is arbi- trary because the irs did not consider whether peti- tioner knew the tax would not be paid the argument is hollow because petitioner’s alleged ignorance of the tax is factually and logically divergent from alleging knowledge that the tax would not be paid it is illog- ical to allege that one was ignorant that tax was due but one had knowledge that the tax would not be paid petitioner’s argument is flawed because it relies on the supposed failure of the irs to consider these divergent factual allegations petitioner alleged to be ignorant of the tax which the irs rejected peti- tioner cannot bemoan that the determination was arbi- trary because the irs did not consider a factual issue that was factually divergent and could not be raised ie knowledge regarding payment of the tax at best for petitioner the knowledge of payment factor is neutral in the analysis due to petitioner’s claimed ignorance that any_tax was owed repro- duced literally we turn first to petitioner’s reliance on wiest v commis- sioner tcmemo_2003_91 that case is materially distinguish- able from the instant case in wiest the taxpayer took the position before the irs and the court that he relied on his spouse to file the return in question and to pay the tax shown due in that return and that he was unaware that she had not in contrast in the instant case petitioner took the position before the irs and takes the position before the court that at the time she signed the return she did not know that that return showed tax due and that therefore at that time she could not have known that mr simon would not pay any such tax thus unlike the taxpayer in wiest petitioner did not claim before the irs and does not claim before the court that she relied on mr simon to pay the tax shown due in the return in addition unlike the instant case in wiest the court found that the spouse of the taxpayer deceived the taxpayer with respect to the filing of the return in question and the payment of the tax shown due in that return moreover unlike the instant case in wiest the irs based its determination that the taxpayer was not enti- tled to relief under sec_6015 principally on its conclu- sions that the unpaid liability in question was not solely attributable to the taxpayer’s spouse and that the taxpayer had knowledge or reason to know of that unpaid liability in con- cluding that the taxpayer had knowledge or reason to know of the unpaid liability in question the irs equated the taxpayer’s knowledge or reason to know that an amount of tax was shown due in the return in question with knowledge or reason to know that such amount shown due would not be paid in contrast in the instant case the appeals_office based its determination that petitioner is not entitled to relief under sec_6015 on its conclusions that the unpaid liability was not attributable solely to mr simon that it is clearly not believable that the taxpayer petitioner did not know of this liability due and that petitioner provided no evidence that she believed the tax would be paid at the time the tax_return was filed as well as on the absence of any economic hardship spousal abuse 10the appeals_office stated in the appeals_office memoran- dum this year was the second year of withdrawals from the nrs’s nonrequesting spouse’s ie mr simon’s ira accounts the likelihood that she peti- tioner did not know of the withdrawals from beginning in that were included on the tax_return is diminished in the second year in addition the with- drawals were included in the income of the tax_return and the return clearly reflected a balance due in excess of dollar_figure it is clearly not believable that the taxpayer did not know of this liability due she petitioner further provided no evidence that she believed the tax would be paid at the time the tax_return was filed reproduced literally and legal_obligation of mr simon to pay such liability on the record before us we find that petitioner’s reliance on wiest v commissioner supra is misplaced on that record we reject petitioner’s arguments in reliance on that case we turn now to whether petitioner has carried her burden of establishing that the knowledge or reason to know positive factor is present in the instant case in support of her position for relief under sec_6015 petitioner chose to present her case to the irs and to the court by claiming that she did not know and had no reason to know that there was tax shown due in the return petitioner must bear the consequences of that choice on the record before us we have serious reservations about petitioner’s contention that she did not know that the return showed tax due because she was hurried when she signed that return nonetheless assuming arguendo that we were to accept such a contention on the instant record we find that by signing the return petitioner is charged with constructive knowledge of inter alia the tax shown due in that return see 25_f3d_1289 5th cir affg tcmemo_1993_252 see also 992_f2d_1256 2d cir affg tcmemo_1992_228 having found that at the time petitioner signed the return she had constructive knowledge of the tax shown due in that return we further find that petitioner should have inquired about whether such tax shown due would be paid it would be inequitable to allow petitioner to turn a blind eye to the tax shown due in the return the amount of such tax shown due was large enough as to put her on notice that further inquiry should be made as to whether it would be paid she failed to do so she thus failed to present any evidence to the irs and to the court with respect to whether the tax shown due in the return would be paid 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 is present in the instant case with respect to the legal_obligation positive factor set forth in sec_4 e of revproc_2000_15 peti- tioner concedes that there is no legal_obligation for mr simon to pay any_tax due for taxable_year we find that peti- tioner concedes that that factor is not present in the instant case with respect to the attribution positive factor set forth in sec_4 f of revproc_2000_15 petitioner concedes that the unpaid liability is not solely attribut- able to mr simondollar_figure we find that petitioner concedes that the attribution positive factor is not present in the instant case turning to the negative factors weighing against granting 11petitioner does not dispute respondent’s determination that approximately percent of the tax due for taxable_year is attributable to petitioner relief under sec_6015 set forth in sec_4 of revproc_2000_15 as pertinent here those factors are a attributable to the requesting spouse the unpaid liability is attributable to the request- ing spouse b knowledge or reason to know a requesting spouse knew or had reason to know that the re- ported liability would be unpaid at the time the return was signed this is an extremely strong factor weigh- ing against relief nonetheless when the factors in favor of equitable relief are unusually strong it may be appropriate to grant relief under sec_6015 in limited situations where a requesting spouse knew or had reason to know that the liability would not be paid c significant benefit the requesting spouse has significantly benefitted beyond normal support from the unpaid liability d lack of economic hardship the requesting spouse will not experience economic hardship within the meaning of sec_4 c of this revenue_procedure if relief from 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 sec_4 a b c d e and f of revproc_2000_15 as the attribution negative factor the knowl- edge or reason to know negative factor the significant benefit negative factor the economic hardship negative factor the tax law noncompliance negative factor and the legal_obligation negative factor respectively we note initially that the parties do not dispute that the knowledge or reason to know negative factor the economic hard- ship negative factor and the legal_obligation negative factor set forth in sec_4 b d and f respectively of revproc_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 sec_4 d b and e respectively of that revenue_procedure we also note that the parties do not dispute that the attribution negative factor set forth in sec_4 a of revproc_2000_15 is essentially the opposite of the attribution positive factor set forth in sec_4 f of that revenue proceduredollar_figure we have found above that petitioner has failed to carry her burden of establishing that the knowledge or reason to know positive factor set forth in sec_4 d of revproc_2000_15 is present in the instant case and that peti- 12we 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 nonetheless we conclude that respondent’s use of the word solely in describing the attribution positive factor but not in describing the attribution negative factor does not affect our findings and conclusions in the instant case with respect to those factors tioner concedes that the economic hardship positive factor set forth in sec_4 b of that revenue_procedure is not present in the instant case on the instant record we further find that petitioner has failed to carry her burden of establish- ing that the knowledge or reason to know negative factor set forth in sec_4 b of revproc_2000_15 is not present in the instant case and that petitioner concedes that the economic hardship negative factor set forth in sec_4 d of that revenue_procedure is present in the instant case with respect to the attribution negative factor set forth in sec_4 a of revproc_2000_15 we have found that petitioner concedes that the unpaid liability is not solely attributable to mr simon respondent concedes that a significant portion approximately percent of that liability is attributable to mr simon on the record before us we find that a significant portion of the liability for taxable_year is not attributable to petitioner with respect to the significant benefit negative factor set forth in sec_4 c of revproc_2000_15 respon- dent does not dispute that that factor is not present in the instant case with respect to the tax law noncompliance negative factor set forth in sec_4 e of revproc_2000_15 respondent does not dispute that that factor is not present in the instant case with respect to the legal_obligation negative factor set forth in sec_4 f of revproc_2000_15 we have found that because petitioner concedes that mr simon does not have a legal_obligation to pay any_tax due for petitioner concedes that the legal_obligation positive factor set forth in sec_4 e of that revenue_procedure is not present in the instant case we have also found that there is no separate legal_obligation such as a divorce decree or a property settle- ment that requires petitioner to pay any such tax duedollar_figure on the record before us we find that the legal_obligation negative factor is not present in the instant case on the record before us we find that petitioner has failed to carry her burden of establishing any other factors that weigh in favor of granting relief under sec_6015 and that are not set forth in sec_4 and of revenue proce- dure based upon our examination of the entire record before us we find that petitioner has failed to carry her burden of showing that respondent abused respondent’s discretion in denying her relief under sec_6015 with respect to the unpaid liability 13division of the marital assets of petitioner and mr simon remains to be adjudicated by the north carolina courts we have considered all of the parties’ arguments and conten- tions 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


t c memo united_states tax_court joseph w dorn petitioner v commissioner of internal revenue respondent docket no 6240-00l filed date joseph w dorn pro_se timothy r maher for respondent supplemental memorandum opinion colvin judge petitioner filed the petition in this case under sec_6330 seeking our review of respondent’s in 119_tc_356 we held that we have jurisdiction under sec_6330 to review respondent’s determination to collect amounts by jeopardy_levy relating to petitioner’s tax years on date david m berman and paul f berman filed a motion to withdraw as counsel for petitioner that motion was granted on date determination to collect amounts by jeopardy_levy relating to petitioner’s tax years the sole issue remaining for decision is whether respondent’s determination was an abuse_of_discretion we hold that it was not section references are to the internal_revenue_code as amended a petitioner background petitioner resided in naples florida when he filed his petition he was retired at the time of trial before he retired petitioner and his brothers operated dorn paint hardware co inc in madison wisconsin petitioner’s former wife filed for divorce in the circuit_court of dane county wisconsin in as a result of his divorce in petitioner was ordered to transfer amounts from his ira pension_plan and profit sharing accounts to his former wife b petitioner’s nonfiling of income_tax returns and notice_of_deficiency petitioner did not file income_tax returns for tax years respondent issued a notice_of_deficiency to petitioner2 for those years in which respondent determined inter alia that the parties dispute whether petitioner received the notice_of_deficiency for for reasons discussed in the opinion below we need not decide that issue petitioner had unreported income of dollar_figure from pension distributions in c the prior proceedings relating to petitioner’s tax years petitioner filed a timely request for a collection_due_process_hearing form respondent held a hearing in this case on date and date petitioner contended at those hearings that he is not liable for tax on any of the funds distributed from his pension_plan because he contended his former wife had received those funds under a qualified_domestic_relations_order qdro he also contended that taxes had already been withheld from the pension distribution petitioner had the opportunity at the hearing on date to present evidence supporting his qdro claim however he offered no evidence showing the amount of funds distributed by the pension_plan to his former spouse and he did not explain why the amount she was to receive under the court order dollar_figure differed from the amount the form_1099 shows the pension_plan distributed to petitioner dollar_figure respondent prepared an initial report on date and a supplemental report on date in which respondent rejected petitioner’s qdro claim trial was held after issuance of respondent’s first report and before issuance of respondent’s second report at trial petitioner did not offer any evidence showing the amount of funds distributed by the pension_plan to his former spouse and did not explain why the amount she was to receive under the court order differed from the amount the form_1099 shows the pension_plan distributed to petitioner opinion petitioner contends that he did not receive the notice_of_deficiency for that his qrdo claim is an appropriate spousal defense and that he is not taxable on funds paid to his former wife from his pension_plan because she received those funds under a qdro to establish that petitioner is not taxable on the funds distributed by his pension_plan petitioner must show inter alia the amount of funds distributed by the plan to his former spouse under the divorce decree and that the divorce decree is a qualified_domestic_relations_order that gave his former spouse the right to receive all or part of petitioner’s benefits under the plan sec_414 petitioner did not offer sufficient evidence at his sec_6330 hearing or before this court to show that he is entitled to prevail here under issue his qdro claim thus regardless of the outcome of issues and petitioner cannot prevail therefore we need not consider issues and we conclude that respondent’s determination to proceed with collection as to petitioner’s tax_liabilities was not an abuse_of_discretion decision will be entered for respondent


t c memo united_states tax_court antoinette j dato-nodurft petitioner v commissioner of internal revenue respondent docket no filed date antoinette j dato-nodurft pro_se monica j miller for respondent memorandum opinion wells chief_judge respondent determined a deficiency of dollar_figure in petitioner’s federal_income_tax for the issue to be decided is whether a certain payment to petitioner by her former husband pursuant to a separation agreement constitutes alimony that is includable in her income under sec_71 all section references are to the internal_revenue_code as amended and all rule references are to the tax_court rules_of_practice and procedure background the parties submitted the instant case fully stipulated without trial pursuant to rule the parties’ stipulations of fact are hereby incorporated by this reference and are found as facts in the instant case on date petitioner married christopher j nodurft in baton rouge louisiana on date petitioner and mr nodurft entered into a separation agreement separation agreement in which petitioner and mr nodurft agreed to live separately and mr nodurft agreed to pay petitioner dollar_figure per month in spousal support until they entered into a final decree of divorce or dissolution the separation agreement provides in part separation of the parties the parties may and shall at all time after the date of permanent separation live and continue to live separate and apart for the rest of their natural lives each shall be free from interference authority and control either direct or indirect by the other as fully as if he or she is single and unmarried the parties shall not molest each other or compel or endeavor to compel the other to cohabit or dwell with him or her by any legal or other proceedings for restitution of conjugal rights or otherwise the separation took place with mutual consent it may not be used as the basis for a charge of desertion or constructive desertion against either party spousal support the parties understand and acknowledge that any obligation to provide spousal support is subject_to modification at any time by order of a court of competent jurisdiction based upon this understanding the parties agree that the husband shall pay to the wife as and for periodic spousal support of the wife the sum of dollar_figure per month until a final decree of divorce or dissolution is entered as between the parties it is further agreed that said payments shall be made by allotment and shall be due and payable on the 1st day of each month the husband recognizes that the wife will depend upon the timely payment of the support to be paid and agrees that should any payment not be received within days of its due_date and should the wife retain counsel that the husband will pay any counsel fees incurred by the enforcement of the obligations under this agreement tax matters annual returns the parties agree to file joint federal and state_income_tax returns for the tax_year and for any subsequent year during which they shall be married and entitled under the applicable laws and regulations to file joint returns provided that such filing results in a lesser combined tax than would result from separate filing each party shall pay that proportionate share of the tax due as shall be attributable to his or her respective earnings or income and each shall indemnify and hold harmless the other against any liability for his or her own proportionate share of said tax any refund that is realized as a result of a joint_return shall be divided equally between the parties during petitioner received from mr nodurft pursuant to the separation agreement payment of dollar_figure payment for 1the separation agreement requires mr nodurft to make monthly payments of dollar_figure to petitioner for a total yearly continued petitioner filed a separate federal tax_return claiming single rates during the year in issue petitioner resided in birmingham alabama and mr nodurft resided in arlington virginia on date the circuit_court of the city of alexandria virginia entered a decree granting the divorce of petitioner and mr nodurft which incorporated by reference the date separation agreement when she filed her petition petitioner resided in longwood florida discussion the issue in the instant case is whether the payment petitioner received from mr nodurft constitutes alimony that is includable in her income under sec_71 sec_71 provides sec_71 alimony and separate_maintenance payments a general_rule --gross income includes amounts received as alimony or separate_maintenance payments b alimony or separate_maintenance payments defined -- for purposes of this section- continued payment of dollar_figure the payment in issue is dollar_figure and the parties have not provided an explanation for this discrepancy 2petitioner does not argue that sec_7491 applies in the instant case moreover the resolution of the instant case does not depend upon which party has the burden_of_proof rather the instant case is decided upon the basis of the fully stipulated facts and the documents contained in the record in general --the term alimony_or_separate_maintenance_payment means any payment in cash if- a such payment is received by or on behalf of a spouse under_a_divorce_or_separation_instrument b the divorce_or_separation_instrument does not designate such payment as a payment which is not includable in gross_income under this section and not allowable as a deduction under sec_215 c in the case of an individual legally_separated from his spouse under a decree of divorce or of separate_maintenance the payee spouse and the payor spouse are not members of the same household at the time such payment is made and d there is no liability to make any such payment for any period after the death of the payee spouse and there is no liability to make any payment in cash or property as a substitute for such payments after the death of the payee spouse divorce_or_separation_instrument --the term divorce_or_separation_instrument means- a a decree of divorce or separate_maintenance or a written instrument incident to such a decree b a written_separation_agreement or c a decree not described in subparagraph a requiring a spouse to make payments for the support or maintenance of the other spouse petitioner contends that because she and her former husband were not legally_separated during the payment she received from her former husband is not alimony we do not agree the relevant inquiry is whether the payment was made pursuant to a written_separation_agreement within the meaning of sec_71 petitioner contends that the separation agreement she and mr nodurft executed was not legally binding and that payments made pursuant to the separation agreement should not be considered alimony petitioner asserts in the petition that petitioner and former husband were advised in the office of the judge advocate of kaneohe bay hawaii usmcb said ‘separation’ documents were not legally binding as they are not issued from a civilian court of law petitioner’s contention fails to appreciate that a payment made pursuant to a written_separation_agreement may be alimony under sec_71 even though the agreement may not be an enforceable instrument under state law see sec_1 b i income_tax regs see also 125_f3d_551 7th cir affg tcmemo_1995_554 benham v commissioner tcmemo_2000_165 the term written_separation_agreement is not defined by the code see 79_tc_340 benham v commissioner supra leventhal v commissioner tcmemo_2000_ a written_separation_agreement is a clear written_statement of the terms of support for separated parties see 59_tc_97 a separation agreement requires mutual assent of the parties 90_tc_684 see also benham v commissioner supra petitioner filed a separate_return for claiming single rates and petitioner and mr nodurft resided in separate states petitioner and mr nodurft signed the separation agreement and petitioner received the payment from mr nodurft pursuant to the separation agreement the separation agreement required mr nodurft to pay petitioner dollar_figure per month until a final decree of divorce or dissolution is entered as between the parties according to its own terms the separation agreement was entered into by petitioner and mr nodurft to effect a permanent separation the separation agreement explicitly provides terms of support that are sufficient for it to be considered a written_separation_agreement under sec_71 see bogard v commissioner supra pincite benham v commissioner supra petitioner’s contention that the separation agreement is not legally enforceable does not change that result see richardson v commissioner supra benham v commissioner supra we have stated that a separation instrument that provides a clear explicit and express direction that a payment made pursuant to that separation instrument is not includable in income under sec_71 and not allowable as a deduction under sec_215 will qualify the payment for exclusion from the recipient’s income see richardson v commissioner supra 112_tc_317 affd without published opinion sub nom schutter v commissioner 242_f3d_390 10th cir medlin v commissioner tcmemo_1998_378 see also sec_1_71-1t q a- temporary income_tax regs fed reg date we conclude that the separation agreement between petitioner and mr nodurft fails to designate that the payments to petitioner are not to be deductible by him under sec_215 or includable in her gross_income under sec_71 the provisions of the separation agreement entitled tax matters require petitioner and mr nodurft to file a joint_return if doing so would result in a lower tax_liability than if they each filed a separate_return the agreement does not require that the payments by him to her be treated as other than alimony on the basis of the foregoing we conclude that the payment petitioner received from her former husband is alimony and is includable in her income pursuant to sec_71 to reflect the foregoing decision will be entered for respondent