t c memo united_states tax_court debra anne banderas petitioner v commissioner of internal revenue respondent docket no filed date p filed joint federal_income_tax returns with her husband h for the and taxable years the returns were signed subsequent to h’s filing for bankruptcy protection and reported balances due that were not paid upon submission following h’s death p sought relief from joint_and_several_liability under sec_6015 i r c with respect to the and liabilities held p is not entitled to relief from joint_and_several_liability pursuant to sec_6015 i r c with respect to her and taxable years james r monroe for petitioner miriam c dillard for respondent memorandum findings_of_fact and opinion wherry judge this case arises from a petition for judicial review filed in response to a determination concerning relief from joint_and_several_liability under sec_6015 the issue for decision is whether denial by respondent of petitioner’s request for relief from joint_and_several_liability for the taxable years and constitutes an abuse_of_discretion findings_of_fact some of the facts have been stipulated and are so found the stipulations of the parties with accompanying exhibits are incorporated herein by this reference petitioner married julio c banderas dr banderas in march of for most of their married life the couple resided in georgia where dr banderas practiced medicine specializing in orthopedic surgery and petitioner stayed at home caring for their children and children from a previous marriage of dr banderas petitioner later returned to school and in completed a registered nursing degree throughout the relevant period and at the time of trial petitioner was employed in the nursing field often working multiple jobs during their unless otherwise indicated section references are to the internal_revenue_code_of_1986 as amended and rule references are to the tax_court rules_of_practice and procedure marriage petitioner and dr banderas maintained and had equal access to a joint checking account and both wrote checks on the account both also opened household mail dr banderas however assumed primary responsibility in handling the family’s financial affairs in the mid-1990s dr banderas became involved in a contract dispute with a business_associate alexander doman dr doman who was to purchase dr banderas’s medical practice in preparation for dr banderas’s retirement the matter proceeded to litigation and resulted in a dollar_figure civil judgment against dr banderas on date to collect on the judgment the banderases’ joint checking account was levied in petitioner then in august of opened a separate checking account into which dr banderas’s social_security checks and petitioner’s income were deposited and out of which living_expenses were paid during the pendency of the foregoing controversy dr banderas retired and he and petitioner moved to florida in early thereafter on date dr banderas filed a voluntary chapter bankruptcy petition in the u s bankruptcy court for the middle district of florida the bankruptcy case was closed by order of that court on date after disbursement by the trustee of more than dollar_figure million meanwhile on date petitioner and dr banderas signed and timely filed a joint form_1040 u s individual_income_tax_return for the return reflected total adjusted_gross_income of dollar_figure consisting primarily of pension annuity and social_security income of dr banderas but also including dollar_figure of wage income earned by petitioner a reported dollar_figure was shown as federal_income_tax withheld dollar_figure of which represented withholding from petitioner’s wages the stated balance due was dollar_figure petitioner was aware of the balance due at the time she signed the return no payment was submitted with the return the banderases’ joint form_1040 for was filed in late reporting a loss and is not at issue here by financial pressures had apparently led dr banderas to return to work then on date dr banderas was diagnosed with cancer the cancer was terminal and dr banderas died of complications from the disease on date on date petitioner signed and timely filed a joint form_1040 for as a surviving_spouse the return reflected total adjusted_gross_income of dollar_figure which amount incorporated wage this court takes judicial_notice of the date order see fed r evid 87_tc_1016 the banderases rounded the amounts reported on their tax returns and social_security income of dr banderas totaling dollar_figure and petitioner’s wages of dollar_figure after subtraction of dollar_figure in federal_income_tax withheld dollar_figure of which was attributed to petitioner’s wages the return reported a balance due of dollar_figure no payment was submitted with the return on or about date the internal_revenue_service irs received from petitioner a signed form_8857 request for innocent spouse relief petitioner indicated on the form_8857 that she was requesting equitable relief under sec_6015 for underpayments of tax for and and she attached the following explanatory statement most of my married life - which was my entire adult life until my husband passed away - i was a stay-at-home wife and mother with my husband working hard to support us and to build what we thought was our retirement_plan in as a result of an unjust judgement against my husband an illegal hold was placed on our joint checking account which caused our check to the irs for the balance of our taxes to bounce due to unavailable funds shortly afterwards my husband was advised to file for bankruptcy before filing we were reassured that the irs would be the creditor and that all taxes would be paid before any other creditors had we not been assured of this my husband would have gotten a distribution from the pension_plan to pay any taxes before filing during the bankruptcy proceedings we realized that our retirement_plan was in reality his retirement_plan - and it was taken away when my petitioner also listed as a year for which she was requesting relief but that year was not further considered after the irs explained that no balance was due husband passed away the proceeds of his life_insurance_policy also went to the bankruptcy court so i found myself at almost years of age not only without my beloved husband but also with the urgent need to prepare financially for my future in an attempt to pay off our debts to support myself since he passed away and to try to prepare for my future retirement i have been working jobs at a time hours week something that i cannot continue much longer finding myself now responsible for an additional bill of over dollar_figure to the irs i am overwhelmed even by the idea of how to pay it off because almost all the taxes were based on my husband’s income etc and the ensuing financial problems were a result of his petition of bankruptcy and the court’s actions i respectfully request that i be relieved of the responsibility of these debts as they present an unfathomable hardship to me petitioner also submitted to the irs a form questionnaire for requesting spouse dated date in response to a question asking her to explain when and how she thought reported balances due would be paid petitioner wrote by proceeds from my husband’s pension_plan - never dreaming that the court would take it away a further question asking what efforts were made to pay reported taxes after relevant returns were filed elicited the following answer everything pension_plan was frozen by the court - we were waiting for the discharge to have the funds freed up - in we found that was never going to happen - accountant said with such a loss we would not owe anything ever again then my husband passed away with dollar_figure left in bankruptcy court they are telling me there will be none left for me or our kids petitioner also on the form completed a statement of her average income and expenses she listed wage income of approximately dollar_figure and monthly expenses totaling approximately dollar_figure petitioner’s request for relief was initially denied by the irs examination_division on date petitioner responded with a statement of disagreement requesting that the irs reconsider the denial her reasons for the continued dispute paralleled those alluded to in her forms and to wit contrary to your conclusion when my husband and i signed the tax returns for we had every reason to believe that we would be able to pay those taxes first of all my husband’s attorney had assured us that the irs was always the first creditor in bankruptcy proceedings therefore we had no doubt that the taxes would be paid through the court as stated in my original request for relief had we even suspected that this would not be the case the amount for the taxes could have - and would have - been withdrawn from the pension_plan monies before the bankruptcy was ever filed also had that suspicion existed we still would have had the security of knowing that the taxes could be paid with pension_plan funds after the bankruptcy was discharged never in our wildest dreams - or worst nightmares - did it ever occur to us that the pension_plan could be lost to the court i believe that it was two years later when we found that this travesty of justice could actually take place while i knew when i filed and signed the return that we had lost our pension_plan i believed again without a doubt that those taxes would be paid shortly after my husband’s death before the return was filed i was told by several sources including the bankruptcy trustee that remaining monies would go to me as his beneficiary when my husband passed away the bankruptcy court received an additional dollar_figure - ¾ of a million dollars - from the proceeds of my husband’s life_insurance_policy monies which i still contend rightfully belong to our children and me therefore although i no longer had faith or trust in our judicial system logic alone told me that there would be more than enough monies to pay all taxes and debts owed it was not until last year that the trustee intimated that although there was over dollar_figure remaining with the court with all creditors having been paid that there may not be anything left for me and or the family over a year later i am still unable to fathom either the ludicrousness or horrific injustice of this outcome petitioner received the requested reconsideration of her claim by the irs office of appeals appeals officer mark pearce mr pearce was assigned petitioner’s case in july of his case activity records show that mr pearce communicated with petitioner or her representative james r monroe mr monroe on a number of occasions and logged at least dollar_figure hours specifically on her case after his review of the case mr pearce concluded in an appeals case memo prepared on date that a weighing of the factors prescribed in revproc_2003_61 2003_2_cb_296 for evaluating claims under sec_6015 did not support petitioner’s request for equitable relief on date the irs issued to petitioner a notice_of_determination denying her request for sec_6015 relief the grounds listed in the notice for the denial were that petitioner had established neither a reasonable belief that the tax would be paid nor economic hardship petitioner filed a timely petition with this court contesting the adverse determination and reflecting an address in cape coral florida a trial was held in november of at the time of trial petitioner had within the last month moved to las vegas nevada and had just begun a new job after posttrial briefs were filed two courts of appeals those for the eighth and ninth circuits ruled that the tax_court lacked jurisdiction to consider denials of relief under sec_6015 in proceedings where no deficiency had been asserted see 446_f3d_785 8th cir affg in part and vacating in part tcmemo_2004_93 439_f3d_1009 9th cir revg 118_tc_494 vacating 122_tc_32 this court subsequently reached the same conclusion in 127_tc_7 given these developments the court on date issued an order directing the parties to show cause why this case should not be dismissed for lack of jurisdiction following responses from both parties the court on date issued tcmemo_2006_228 holding that we were constrained to dismiss this case an order of dismissal for lack of jurisdiction was entered on the same date thereafter the tax relief and health care act of publaw_109_432 div c sec_408 120_stat_3061 amended sec_6015 to provide that this court may review the commissioner’s denial of relief under sec_6015 in cases where no deficiency has been asserted the amendment applies with respect to liability for taxes arising or remaining unpaid on or after the date date of enactment id once again in light of the change in the law the court on date issued an order directing the parties to show cause why the earlier dismissal for lack of jurisdiction should not be vacated respondent filed a response confirming that petitioner’s liabilities for the relevant years remain unpaid and that the court now has jurisdiction to review the underlying determination the court issued an order vacating the date dismissal on date this matter is now in a posture to be addressed on the merits opinion as a general_rule sec_6013 provides that if a joint_return is made the tax shall be computed on the aggregate income and the liability with respect to the tax shall be joint_and_several an exception to such joint_and_several_liability exists however for spouses able to satisfy the statutory requirements for relief set forth in sec_6015 sec_6015 authorizes three types of relief subsection b provides a form of full or partial relief available to all joint filers and similar to but less restrictive than that previously afforded by former sec_6013 which was repealed for taxes remaining unpaid as of date or arising after that date subsection c permits a taxpayer who has divorced or separated to elect to have his or her tax_liability calculated proportionately as if separate returns had been filed subsection f confers discretion upon the commissioner to grant equitable relief based on all facts and circumstances as follows sec_6015 relief from joint_and_several_liability on joint_return f equitable relief --under procedures prescribed by the secretary if-- taking into account all the facts and circumstances it is inequitable to hold the individual liable for any unpaid tax or any deficiency or any portion of either and relief is not available to such individual under subsection b or c the secretary may relieve such individual of such liability the court reviews a denial of relief under sec_6015 for abuse_of_discretion ie whether respondent’s determination was arbitrary capricious or without sound basis in law or fact 118_tc_106 affd 353_f3d_1181 10th cir 114_tc_276 except as otherwise provided in sec_6015 the taxpayer generally bears the burden of proving such an abuse_of_discretion rule a 119_tc_306 affd 101_fedappx_34 6th cir jonson v commissioner supra pincite relief under sec_6015 or c is premised on the existence of an understatement or deficiency because the liabilities at issue in this case derive from unpaid taxes reported on the and returns petitioner is not eligible for relief under subsection b or c accordingly there is no dispute that petitioner satisfies the criterion for equitable relief codified in sec_6015 the instant dispute thus centers on the facts and circumstances inquiry of sec_6015 as directed by sec_6015 the secretary has promulgated guidance to structure the relevant facts and circumstances analysis the applicable version of which is set forth in revproc_2003_61 2003_2_cb_296 revproc_2003_ sec_4 c b pincite first lists seven threshold conditions that must be met before the irs will consider a request for relief under sec_6015 the requesting spouse filed a joint_return for the year for which relief is sought relief is not available under sec_6015 or c the application_for relief is made no later than years after the date of the irs’s first collection activity no assets were transferred between the spouses as part of a fraudulent scheme the nonrequesting spouse did not transfer disqualified assets to the requesting spouse the requesting spouse did not file or fail to file the return with fraudulent intent and absent enumerated exceptions the liability from which relief is sought is attributable to an item of the nonrequesting spouse respondent here concedes that petitioner meets these seven conditions revproc_2003_61 sec_4 c b pincite then gives three circumstances under which if all are satisfied the irs ordinarily will grant relief with respect to underpayments on joint returns the first of these elements requires that on the date of the request for relief the requesting spouse be no longer married to be legally_separated from or not have been a member of the same household as the nonrequesting spouse at any time during the preceding 12-month_period id sec_4 a c b pincite the death of dr banderas in november of preceded petitioner’s request by more than months and this element therefore raises no barrier the remaining two elements however which address knowledge and economic hardship are at the crux of the instant controversy the second or knowledge element requires that on the date the requesting spouse signed the joint_return the requesting spouse had no knowledge or reason to know that the nonrequesting spouse would not pay the income_tax_liability the requesting spouse must establish that it was reasonable for the requesting spouse to believe that the nonrequesting spouse would pay the reported income_tax_liability if a requesting spouse would otherwise qualify for relief under this section except for the fact that the requesting spouse’s lack of knowledge or reason to know relates only to a portion of the unpaid income_tax_liability then the requesting spouse may receive relief to the extent that the income_tax_liability is attributable to that portion id sec_4 b 2003-c b pincite petitioner argues that respondent erred in concluding that she possessed knowledge or reason to know that the taxes would not be paid as to petitioner contends that she had a reasonable belief that the taxes would be paid either out of the bankruptcy proceeding from dr banderas’s pension_plan or from future earnings obtained through dr banderas’s returning to work as to petitioner alleges that she reasonably believed that the taxes would be paid from funds remaining after the close of the bankruptcy proceeding particularly in light of the additional dollar_figure received by the bankruptcy_estate from a life_insurance_policy on dr banderas petitioner testified regarding payment of the balances due on the and returns of which she was concededly aware the following colloquy on direct examination dealt with q taxes did your husband attempt to pay the a we didn’t--we had no access to the money at that time it was in the bankruptcy court and we-- q a q a q so the bankruptcy was filed in right before we filed the return and the return was filed in right and all the funds were tied up in bankruptcy a right q a a q a what source did your husband attempt to use to pay the taxes that were due well we were told that the irs was the number one creditor and we expected the court the bankruptcy court to pay the taxes q any other source a if we--well the pension_plan because we thought the pension_plan was protected and we never thought that was going to be taken away from us q how much was in the pension_plan over a million dollars plus my husband’s life_insurance ended up being in there too so over dollar_figure million in the end did somebody tell you that the pension funds were exempt we have always been told that the pension_plan was exempt yes q what would have happened if the pension_plan didn’t pay for the taxes and the bankruptcy hadn’t paid for the taxes was there any other source of-- a my husband would have had to go back to work which he ended up having to do anyway with respect to counsel inquired what was your intent regarding the balance due that was shown on the tax_return petitioner replied i anticipated money coming from the bankruptcy court to pay it off and she went on to cite the pension_plan and life_insurance the overarching general question raised by petitioner’s contentions is one of timing the standard suggested by petitioner on brief highlights this issue the test should be whether the requesting spouse had a reasonable belief that the taxes would eventually be paid_by the non-requesting spouse emphasis added petitioner was clearly aware on the dates she signed the form sec_1040 that no liquid funds were available and on hand to be submitted with the returns she knew that the bulk of dr banderas’s assets were tied up in the bankruptcy there is no suggestion that any concrete steps had been taken or were ever taken to try to obtain a distribution from the pension_plan and dr banderas had not yet returned to gainful employment at the time of filing the return for and was deceased at the time of filing the return for it would thus appear that petitioner had not so much a reasonable belief that the taxes would be paid as an inchoate hope for a favorable change_in_circumstances that would at some undefined future point in time place moneys at dr banderas’s or her own disposal to pay the taxes petitioner has at no juncture made any attempt to identify when in terms of a particular time period she thought the taxes would be paid furthermore although petitioner has generally alluded to being told that the irs would be the number one creditor in the bankruptcy and that the pension_plan was exempt she did not call any witnesses to establish the specific information she was given as much as we sympathize with the unfortunate even tragic string of events that befell the banderas household we cannot accept a test so nebulous as that proposed by petitioner to do so would essentially eviscerate the reasonable belief standard eventually is simply too open-ended to place any meaningful or administratively workable limits on qualification for relief the court concludes that a reasonable belief that taxes would be paid must at minimum incorporate a belief that funds would be on hand within a reasonably prompt period of time as just indicated petitioner has failed to make such a showing here furthermore because petitioner has never identified any timeframe the court need not probe the contours of the how soon question or even whether the standard should be limited to taxpayers are required to pay their taxes when due a delay in payment not authorized by statute renders the government an involuntary creditor without security or other assurance that the tax and interest thereon will be paid when tax or interest due is not paid the burdens of government are transferred to other taxpayers including those of future generations where all funds needed to pay the taxes for a year of bankruptcy will be trapped in the bankruptcy_estate or for any other reason the bankrupt taxpayer and spouse may at the taxpayer’s or spouse’s option elect to close their taxable years effective on the day before the bankruptcy case was commenced sec_1398 this election create sec_2 short taxable years the tax_liability for the first of which is included as a claim against the debtor’s estate and is payable from the estate id see also sec_6161 regarding authorized extensions of time to pay situations where moneys were thought to be available at the time the relevant return was signed and filed the foregoing conclusion is consistent with the result reached by this court in other contexts involving factual contingencies regarding source of payment in vuxta v commissioner tcmemo_2004_84 the court addressed a taxpayer’s request for relief under sec_6015 for and the underlying returns showing balances due had been filed on date date and date respectively the taxpayer and her husband had filed for placement of the modifying prepositional phrase on the date the requesting spouse signed the joint_return in the text of revproc_2003_61 sec_4 b 2003_2_cb_296 would not appear to be conclusive on this issue while the court’s placement of the phrase has varied certain paraphrases of the standard are amenable to a reading that could require a belief that actual payment of the taxes would occur with the filing of the return e g merendino v commissioner tcmemo_2006_2 the relevant knowledge in the case of a reported but unpaid liability is that the tax would not be paid when the return was signed the legislative_history of the provision might be open to a similar reading in that the example supplied indicates congress intended for equitable relief to be granted where a requesting spouse does not know and had no reason to know that funds intended for the payment of tax were instead taken by the other spouse for such other spouse’s benefit h conf rept pincite 1998_3_cb_1008 again however the court need not decide here whether such usages or examples operate as limitations additionally guidelines set forth in the internal_revenue_manual irm could suggest a more liberal reading stating a belief the tax would be paid is not reasonable if the rs requesting spouse knew or had reason to know the nrs nonrequesting spouse was not in an economic position and was not expected to be in an economic position within the foreseeable future to pay those taxes irm sec_25 bankruptcy on date and received a discharge on date this court concluded that while the taxpayer lacked knowledge or reason to know that the taxes for would not be paid she knew or had reason to know that the and liabilities would be unpaid because the return for preceded the bankruptcy petition by only a little over months and the return for was filed during pendency of the bankruptcy case in morello v commissioner tcmemo_2004_181 the taxpayer’s husband lost his job in and she returned to work after more than years as a homemaker in order to help relieve resultant financial difficulties by the time tax returns for through were signed and filed in financial pressures including mortgage foreclosure proceedings and the fact that her husband was contemplating and then did file for bankruptcy had continued to plague the family for a number of years because the taxpayer was aware of these circumstances we held that she had not established that it was reasonable for her to believe that the balances shown as due on the returns would be paid given the foregoing the court cannot conclude that the facts of this case are consistent with a reasonable belief that the taxes would be paid accordingly petitioner has not shown that at the times she signed the and returns she had no knowledge or reason to know that the taxes would not be paid her sincere hope for payment through eventual receipt of funds from various contingencies is not sufficiently concrete to fall within the ambit of a meaningful reasonableness standard the third and final element of section dollar_figure of revproc_2003_61 places a requirement that the requesting spouse will suffer economic hardship if relief is not granted id sec_4 c c b pincite for purposes of making the hardship determination revproc_2003_61 supra references the rules in sec_301_6343-1 proced admin regs the cited provision defines economic hardship as an inability to pay reasonable basic living_expenses and directs the commissioner to consider factors such as among other things the taxpayer’s age employment status and history ability to earn number of dependents and amount reasonably necessary for food clothing housing utilities medical_expenses insurance including home- owner health transportation current tax_payments etc sec_301_6343-1 proced admin regs the parties dispute what information the court should consider in its analysis of this element respondent’s position is that consideration should take into account only those materials provided to the appeals_office during the underlying administrative process petitioner disagrees and has sought to supplement the administrative record in several respects petitioner suggests that a purportedly insufficient quantity of time spent by the appeals officer in reviewing her case and the officer’s failure to request updated financial information justify augmentation of the record the court stated its position on this issue in ewing v commissioner t c pincite in exercising our jurisdiction under sec_6015 to determine whether a taxpayer is entitled to relief under sec_6015 it is appropriate for this court de novo to consider evidence beyond the administrative record vacated on other grounds 439_f3d_1009 9th cir however because here the outcome flowing from a limited review of the administrative record alone and that obtaining after taking into account all information proffered by petitioner are identical the court finds it unnecessary to comment further on the merits of the parties’ differing views of the proper record for review during the administrative phase petitioner submitted a form dated date showing an excess of income over expenses of approximately dollar_figure per month this portrayal clearly fails to reflect economic hardship and we do not read petitioner’s arguments to contend otherwise nor does petitioner suggest that she provided updated financial information to the appeals officer at any time prior to his final recommendations on her case in early to the extent that petitioner intimates that the burden rested entirely on the appeals officer to request new data her point in this particular context is not well taken as a general matter taxpayers are usually responsible for establishing their positions before the irs second on a more specific and practical level petitioner despite being represented by counsel apparently never alerted the appeals officer of any relevant change_in_circumstances furthermore the types of items reported on the form were not inherently of a nature to raise a suspicion of dramatic change over the course of the ensuing period the only likely difference hinted at on the face of the form would have been a reduction in income as petitioner appended a comment that she might be unable to continue to sustain multiple jobs however third-party payers reported to the irs even higher wages of dollar_figure for the completed taxable_year of the most recent year for which records would have been available during at least the majority of the time petitioner’s case was before mr pearce this fact was noted by the appeals officer in his recommendations third-party payers similarly reported still higher wages to petitioner of dollar_figure for in this scenario the court despite its admiration for petitioner’s efforts to help herself is unconvinced that petitioner may abdicate all responsibility for raising some issue of pertinent change or conversely that the appeals officer acted arbitrarily or capriciously in relying on the information previously provided additionally the court is not persuaded that petitioner’s remarks concerning the quantum of time devoted to her case should have any bearing on our analysis the recorded time is in no way patently insufficient and the court is not in a position to divine any type of arbitrary standard as to the time it might take an individual to properly evaluate a given set of facts at trial petitioner sought to introduce three 1-page sheets of financial information all dated date the date of the calendar call a listing of assets and liabilities a listing of purported actual current income and expenses and a listing of current income and expenses incorporating national regional and local irs standards the listings were not accompanied by any supporting documentation counsel for respondent objected on grounds in part that she was not provided with the exhibits until the morning of trial the court in light of the standing_pretrial_order and citing the prejudice to respondent’s ability to prepare for cross- examination sustained the objection and the documents were not admitted instead petitioner testified regarding her estimates of various assets liabilities income amounts and expenses petitioner then filed a posttrial brief and attached thereto three tables purportedly summarizing petitioner’s testimony and bearing striking similarity to the exhibits not admitted at trial with the income and expense listings now bearing two columns one labeled date and the other labeled date however the tables incorporate noticeably more detail and precision than can reasonably be gleaned from petitioner’s often generalized approximations from the stand it is the status of the record as just described that precipitated the court’s comment that the outcome of the case is unaffected regardless of any proffered information considered in augmentation of the administrative record the complete dearth of any documentation to corroborate or substantiate the figures renders petitioner’s various estimates unpersuasive in any event moreover the court would observe that only the computations purporting to detail income and expenses as of date show an excess of expenses over income and it is decidedly questionable whether all of those expenses shown are properly taken into account for purposes of sec_301_6343-1 proced admin regs for example charitable_contributions and payments on various liabilities the court is therefore constrained to conclude that petitioner has failed to establish economic hardship within the meaning of revproc_2003_61 sec_4 c b pincite accordingly on account of failure to satisfy two of the three elements enumerated as delineating those circumstances in which the commissioner will ordinarily grant relief petitioner does not qualify for equitable relief under revproc_2003_61 sec_4 c b pincite where relief is not available under section dollar_figure of revproc_2003_61 section dollar_figure of the revenue_procedure sets forth a list of nonexclusive factors that the commissioner will consider in determining whether it would be inequitable to hold the requesting spouse liable for all or part of the unpaid income_tax_liability as emphasized in revproc_2003_61 sec_4 c b pincite no single factor is to be determinative rather all factors are to be considered and weighed appropriately eight factors are listed the latter two of which will weigh in favor of granting relief if present but will not weigh against relief if absent the factors are directed toward whether the requesting spouse is separated or divorced from the nonrequesting spouse the requesting spouse will suffer economic hardship without relief the requesting spouse did not know or have reason to know that the nonrequesting spouse would not pay the liability the nonrequesting spouse had a legal_obligation to pay the outstanding liability the requesting spouse received significant benefit beyond normal support from the enhanced assets or income resulting from the unpaid liability the requesting spouse has made a good_faith effort to comply with income_tax laws in subsequent years the requesting spouse was abused by the nonrequesting spouse and the requesting spouse was in poor mental or physical health when signing the return or requesting relief revproc_2003_ sec_4 a and b c b pincite as just described in connection with analysis of section dollar_figure of revproc_2003_61 the marital status factor weighs in favor of granting relief while the economic hardship and knowledge elements weigh against granting relief the remaining factors are considered below the legal_obligation factor asks whether the nonrequesting spouse has an obligation to pay the outstanding liability pursuant to a divorce decree or separation agreement id sec_4 a iv c b pincite because petitioner and dr banderas were never divorced or separated this factor is neutral the significant benefit factor probes whether the requesting spouse received directly or indirectly from the assets or income resulting from the unpaid liability any benefit in excess of normal support sec_1_6015-2 income_tax regs revproc_2003_61 sec_4 a v c b pincite referencing sec_1_6015-2 income_tax regs evidence of such benefit may consist of transfers of property or rights to property including transfers that may be received several years after the year of the relevant return sec_1 d income_tax regs normal support is measured by the circumstances of the particular parties 93_tc_672 levy v commissioner tcmemo_2005_92 respondent notes that from to the banderases or petitioner sold several parcels of real_property and received approximately dollar_figure to dollar_figure on each of the three transactions petitioner testified that the proceeds were used primarily to pay living and moving_expenses to make a downpayment on a new residence and to contribute to the cost of a daughter’s wedding in petitioner received a dollar_figure distribution from her individual_retirement_account petitioner also acknowledged making a loan of conservatively at least dollar_figure during to a friend whose whereabouts were unknown at the time of trial in the unique circumstances of this case particularly the fact that the majority of the banderases’ assets were tied up in the bankruptcy litigation the described uses of the relatively modest proceeds from the property transactions would not generally appear to rise to the level of excess_benefit the wedding costs however give us pause likewise the dollar_figure loan and the failure to apply any of the retirement account distribution to outstanding taxes could signal a more telling selective avoidance of tax_liabilities nonetheless the court is also cognizant that while the bankruptcy establishes reason to know that the taxes would not be paid at the time of filing its pendency could have engendered a degree of confusion in petitioner’s mind as to responsibility for the taxes and the eventual source of funds for their payment the court therefore is unconvinced that the substantial benefit prong weighs strongly either for or against relief the compliance with income_tax laws factor addresses the good_faith efforts of the requesting spouse in subsequent years revproc_2003_61 sec_4 a vi c b pincite the record indicates that petitioner’s return was not timely filed and that amounts due remained outstanding until at least february of the and returns were timely filed but the balance due for was not paid until january of the taxes were timely paid as of the time of trial irs records did not reflect that petitioner had filed her or returns petitioner testified that she believed she timely filed the return but refiled it in response to irs inquiries shortly before the trial in november of at which time she also filed her initial return for petitioner also explicitly conceded at trial and on brief that various of her returns and related payments were delinquent on account of financial difficulties moves misplaced documents etc hence petitioner’s compliance with tax laws subsequent to the filing of the return reveals shortcomings additionally petitioner’s generalized allusions to financial pressures and information misplaced during moves are insufficient to establish good_faith efforts with respect to the series of delinquencies occurring over a period of years this factor weighs against relief the presence of abuse is a factor weighing in favor of relief but its absence carries no contrary weight revproc_2003_61 sec_4 b i c b pincite because petitioner has at no point alleged any abuse by dr banderas this factor is neutral the final factor enumerated in the revenue_procedure and again weighing only in favor of and not against relief is directed toward whether the requesting spouse was in poor mental or physical health when signing the return or seeking relief id sec_4 b ii c b pincite the nature extent and duration of illness are to be taken into account id petitioner’s statements at trial and on brief incorporate general assertions of high blood pressure depression and bad knees nonetheless the record is bereft of any corroborating medical documentation or any specific contentions regarding how such ailments might have impacted petitioner’s ability to meet her federal tax obligations in fact petitioner acknowledged that except for her weight she was in good health during the and years at issue and until when her blood pressure began rising the court observes that petitioner was able to work multiple jobs throughout much of the relevant period thus while the court does not doubt that petitioner bore substantial stress on account of the difficult circumstances besetting her family the record does not enable us to find particular health issues of a nature that would affect the balancing of her claim for relief this factor too is neutral accordingly of those factors identified in the pertinent revenue_procedure only one weighs clearly in favor of granting relief the remainder are either negative or essentially neutral the court is therefore unable to conclude that respondent’s denial of equitable relief under sec_6015 was an abuse_of_discretion the court has considered all other arguments made by the parties and to the extent not specifically addressed herein has concluded that they are without merit or are moot to reflect the foregoing decision will be entered for respondent


third party communication none date of communication not applicable office_of_chief_counsel internal_revenue_service memorandum number release date cc ita b01 jkristall postn-126197-12 uilc date date to lawrence davidow senior counsel large business international from nancy lee assistant to the branch chief branch income_tax accounting subject go shop provisions this chief_counsel_advice responds to your request for assistance this advice may not be used or cited as precedent summary this memorandum responds to your request for help in determining whether a go shop provision in a merger agreement affects the bright-line date described in sec_1_263_a_-5 for the reasons discussed below we conclude that a go shop provision in a fully-executed merger agreement does not change the bright-line date for purposes of sec_1_263_a_-5 please contact jason kristall at if you would like further assistance or have any questions about this memorandum or our conclusion facts acquiring_corporation acquirer acquires target_corporation target in a transaction described in sec_1_263_a_-5 the terms of the agreement are set forth in a merger agreement that was executed by representatives of both corporations and approved by both corporations’ boards of directors on date pursuant to this merger agreement target retained the right until date to continue to look for another acquirer the go shop provision had target received a better offer acquirer would have had an opportunity to match that offer postn-126197-12 had acquirer declined to match the offer target would have been free to abandon its agreement with acquirer and enter into a deal with the alternate acquirer instead some time after date the transaction between acquirer and target closed successfully law sec_1_263_a_-1t c provides that no deduction is allowed for an amount_paid to acquire or create an intangible which under sec_1_263_a_-4 and d i a includes an ownership_interest in a corporation or other entity see also sec_1_263_a_-4 under sec_1_263_a_-5 a taxpayer must capitalize an amount_paid to facilitate the business acquisition or reorganization transactions described in sec_1_263_a_-5 an amount is paid to facilitate a transaction described in sec_1_263_a_-5 if the amount is paid in the process of investigating or otherwise pursuing the transaction whether an amount is paid in the process of investigating or otherwise pursuing the transaction is determined based on all of the facts and circumstances sec_1_263_a_-5 sec_1_263_a_-5 provides that an amount other than an inherently facilitative amount_paid in the process of investigating or otherwise pursuing a covered transaction as described in sec_1_263_a_-5 facilitates the transaction only if the amount relates to activities performed on or after the earlier of the date on which a letter of intent exclusivity agreement or similar written communication other than a confidentiality agreement is executed by representatives of the acquirer and the target or the date on which the material terms of the transaction as tentatively agreed to by representatives of the acquirer and the target are authorized or approved by the taxpayer’s board_of directors or committee of the board_of directors bright-line date analysis amounts that are not inherently facilitative but that are paid in the process of investigating or otherwise pursuing a covered transaction facilitate the transaction only if they relate to activities performed on or after the bright-line date under the regulation this bright-line date is the earlier of the date a letter of intent exclusivity agreement or similar written communication is executed by representatives of both parties or the date that the material terms of the transaction are approved by the parties’ boards of directors in this case the execution of the merger agreement and the approval of the terms therein by the parties’ boards of directors occur on the same date the go shop provision is only one of the terms of this merger agreement and does not serve to negate the document’s execution nor does it trump the approval of those terms by the postn-126197-12 corporations’ boards of directors therefore the bright-line date in this case is date the date of the merger agreement’s execution and its approval by the corporations’ boards of directors conclusion the execution of a merger agreement that sets forth the terms of a covered transaction and is approved by both parties’ boards of directors on the date of execution establishes the bright-line date for purposes of sec_1_263_a_-5 the inclusion of a go shop provision does not change this bright-line date case development hazards and other considerations this writing may contain privileged information any unauthorized disclosure of this writing may undermine our ability to protect the privileged information if disclosure is determined to be necessary please contact this office for our views


internal_revenue_service number release date index number 468a ------------------ ------------------------------------ ------------------------------------------------- ----------------------- ---------------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------------- id no ------------------ ----------------------------------------------------- telephone number --------------------- refer reply to cc psi b06 plr-114614-09 date date legend taxpayer parent plant location industry director commission x commission a commission b commission c method order a order b order c fund independent study dear -------------- ------------------------------------------------- ein ---------------- --------------------------------------------- ein ---------------- ------------------------------------------------ ------------------------------- --------------------------------------------------------------------------------- ------------------------------------------- --------------------------------------------------------------------------------- --------------------------------------------------------------------------------- ----------------------------------------------------- ---------------------- --------------------------------- ----------------------------------------- -------------------------- --------------------------------------------------------------------------------- --------------------------------------------------------------------------------- this letter responds to your request dated --------------------- for a mandatory review of a revised schedule of ruling amounts pursuant to sec_468a of the internal_revenue_code and sec_1_468a-3t f iv of the temporary income_tax regulations with regard to a qualified nuclear decommissioning reserve fund that the taxpayer has established for the plant and associated facilities taxpayer was previously granted schedules of ruling amounts most recently on ------------------- this request is prompted by the fact that the extension of the plant’s nuclear operating license which was assumed in the prior ruling_request has been issued by commission x but after the service issued the schedule of ruling amounts plr-114614-09 taxpayer represents the facts and information relating to its request for a revised schedule of ruling amounts as follows taxpayer owns a --- percent interest as a tenant in common in the plant which is situated in location taxpayer is a wholly-owned subsidiary of parent taxpayer is under the audit jurisdiction of the industry director taxpayer is subject_to the jurisdiction of commission a -------- percent and commission b -------- percent these jurisdictional percentages total --------percent this number is less than ----- percent because the jurisdictional percentages are determined by different jurisdictions at different times taxpayer is also subject_to regulation by commission c the plant's extended operating license will expire on --------------------- the method of decommissioning the plant is method in order a commission a reduced the amount of decommissioning costs for the plant included in cost of service as a result of a recent study provided by the taxpayer order a provides for an estimated plant decommissioning cost of dollar_figure--------------------------- ----------------------------------------------------------------------------------------------------- ------- dollars the average after-tax rate of return to be earned on assets for the taxpayer is ------ percent using an inflation_adjustment_factor of -----percent the taxpayer's jurisdictional share of decommissioning the plant in future dollars is dollar_figure----------------- the estimated date on which the plant will no longer be included by commission a in taxpayer's rate base for ratemaking purposes is ------- the funding_period and level_funding limitation period for the plant extend through ------- the estimated taxable_year in which substantial completion of decommissioning the plant will occur is ------- in order b commission b increased the amount of decommissioning costs for the plant included in cost of service as a result of a recent study provided by the taxpayer order b provides for an estimated plant decommissioning cost of dollar_figure----------------- --------dollars the average after-tax rate of return to be earned on assets for the taxpayer is ------ percent using an inflation_adjustment_factor of ------ percent the taxpayer's jurisdictional share of decommissioning the plant in future dollars is dollar_figure----------------- the estimated date on which the plant will no longer be included by commission b in taxpayer's rate base for ratemaking purposes is ------- the funding_period and level_funding limitation period for the plant extend through ------ the estimated taxable_year in which substantial completion of decommissioning the plant will occur is ------- in order c commission x approved the taxpayer’s request to extend the plant’s operating license through --------------------- sec_468a as amended by the energy tax incentives act of the act publaw_109_58 119_stat_594 allows an electing taxpayer to deduct payments made to a nuclear decommissioning reserve fund sec_468a limits the amount that may be paid into the nuclear decommissioning fund in any year to the ruling plr-114614-09 amount applicable to that year sec_468a provides that no deduction shall be allowed for any payment to the nuclear decommissioning fund unless the taxpayer requests and receives from the secretary a schedule of ruling amounts the ruling_amount for any_tax year is defined under sec_468a as the amount which the secretary determines to be necessary to fund the total nuclear decommissioning cost of that nuclear power plant over the estimated_useful_life of the plant this term is further defined to include the amount necessary to prevent excessive funding of nuclear decommissioning costs or funding of these costs at a rate more rapid than level_funding taking into account such discount rates as the secretary deems appropriate sec_468a provides that a taxpayer shall be deemed to have made a payment to the nuclear decommissioning fund on the last day of a taxable_year if the payment is made on account of such taxable_year and is made within 2½ months after the close of the tax_year this section applies to payments made pursuant to either a schedule of ruling amounts or a schedule of deduction amounts sec_1_468a-1t a provides that an eligible_taxpayer may elect to deduct nuclear decommissioning costs under sec_468a of the code an eligible_taxpayer as defined under sec_1_468a-1t b of the regulations is a taxpayer that has a qualifying interest in any portion of a nuclear power plant a qualifying interest is among other things a direct ownership_interest sec_1_468a-2t b provides that the maximum amount of cash payments made or deemed made to a nuclear decommissioning fund during any_tax year shall not exceed the ruling_amount applicable to the nuclear decommissioning fund for such taxable_year the limitation on the amount of cash payments for purposes of sec_1_468a-2t b does not apply to any special transfer permitted under sec_1_468a-8t sec_1_468a-3t a provides that in general a schedule of ruling amounts for a nuclear decommissioning fund is a ruling specifying annual payments that over the tax years remaining in the funding_period as of the date the schedule first applies will result in a projected balance of the nuclear decommissioning fund as of the last day of the funding_period equal to and in no event more than the amount of decommissioning costs allocable to the fund sec_1_468a-3t a provides that to the extent consistent with the principles and provisions of this section each schedule of ruling amounts shall be based on reasonable assumptions concerning the after-tax rate of return to be earned by the amounts collected for decommissioning the total estimated cost of decommissioning the nuclear plant and the frequency of contributions to a nuclear decommissioning fund for a taxable_year under sec_1_468a-3t a the internal_revenue_service shall provide a schedule of ruling amounts identical to the schedule proposed by the taxpayer but no plr-114614-09 such schedule shall be provided by the service unless the taxpayer's proposed schedule is consistent with the principles and provisions of that section sec_1_468a-3t a provides that the taxpayer bears the burden of demonstrating that the proposed schedule of ruling amounts is consistent with the principles of the regulations and that it is based on reasonable assumptions that section also provides additional guidance regarding how the service will determine whether a proposed schedule of ruling amounts is based on reasonable assumptions for example if a public_utility commission established or approved the currently applicable rates for the furnishing or sale by the taxpayer of electricity from the plant the taxpayer can generally satisfy this burden_of_proof by demonstrating that the schedule of ruling amounts is calculated using the assumptions used by the public_utility commission in its most recent order in addition a taxpayer that owns an interest in a deregulated nuclear plant may submit assumptions used by a public_utility commission that formerly had regulatory jurisdiction over the plant as support for the assumptions used in calculating the taxpayer's proposed schedule of ruling amounts with the understanding that the assumptions used by the public_utility commission may be given less weight if they are out of date or were developed in a proceeding for a different taxpayer the use of other industry standards such as the assumptions underlying the taxpayer's most recent financial assurance filing with the nrc are described by the temporary regulations as an alternative means of demonstrating that the taxpayer has calculated its proposed schedule of ruling amounts on a reasonable basis sec_1_468a-3t a further provides that consistency with financial_accounting statements is not sufficient in the absence of other supporting evidence to meet the taxpayer's burden_of_proof sec_1_468a-3t b provides that in general the ruling_amount for any_tax year in the funding_period shall not be less than the ruling_amount for any earlier tax_year under sec_1_468a-3t c the funding_period begins on the first day of the first tax_year for which a deductible payment is made to the nuclear decommissioning fund and ends on the last day of the taxable_year that includes the last day of the estimated_useful_life of the nuclear power plant to which the fund relates sec_1_468a-3t c provides rules for determining the estimated_useful_life of a nuclear plant for purposes of sec_468a in general under sec_1_468a-3t c i a if the plant was included in rate base for ratemaking purposes for a period prior to date the date used in the first such ratemaking proceeding as the estimated date on which the nuclear plant will no longer be included in the taxpayer's rate base is the end of the estimated_useful_life of the nuclear plant sec_1_468a-3t c i b provides that if the nuclear plant is not described in sec_1_468a-3t c i a the last day of the estimated_useful_life of the nuclear plant is determined as of the date the plant is placed_in_service under sec_1_468a-3t c i c any reasonable method may be used in determining the estimated_useful_life of a nuclear power plant that is not described in sec_1_468a-3t c i a plr-114614-09 sec_1_468a-3t d provides that the amount of decommissioning costs allocable to a nuclear decommissioning fund is the taxpayer's share of the total estimated cost of decommissioning the nuclear power plant sec_1_468a-3t d provides that a taxpayer's share of the total estimated cost of decommissioning a nuclear power plant equals the total estimated cost of decommissioning such plant multiplied by the taxpayer's qualifying interest in the plant sec_1_468a-3t e enumerates the information required to be contained in a request for a schedule of ruling amounts filed by a taxpayer in order to receive a ruling_amount for any taxable_year sec_1_468a-3t f requires a taxpayer that has obtained a schedule of ruling amounts pursuant to sec_1_468a-3t e to file a request for a revised schedule of ruling amounts on or before the deemed payment deadline date for the 10th taxable_year that begins after the taxable_year in which the most recent schedule of ruling amounts was received if the taxpayer calculated its most recent schedule of ruling amounts on any basis other than an order issued by a public_utility commission the taxpayer must file a request for a revised schedule of ruling amounts on or before the deemed payment deadline date for the 5th taxable_year that begins after the taxable_year in which the most recent schedule of ruling amounts was received sec_1_468a-3t f provides that any taxpayer that has previously obtained a schedule of ruling amounts can request a revised schedule of ruling amounts such a request must be made in accordance with the rules of sec_1_468a-3t e the internal_revenue_service shall not provide a revised schedule of ruling amounts applicable to a taxable_year in response to a request for a schedule of ruling amounts that is filed after the deemed payment deadline date for such taxable_year we have examined the representations and information submitted by the taxpayer in relation to the requirements set forth in sec_468a and the regulations thereunder based solely upon these representations of the facts we reach the following conclusions taxpayer has a qualifying interest in the plant and is therefore an eligible_taxpayer under sec_1_468a-1t b of the regulations taxpayer as owner of the plant has calculated its share of the total decommissioning costs under sec_1_468a-3t d of the regulations taxpayer has proposed a schedule of ruling amounts which meets the requirements of sec_1_468a-3t a and of the regulations the annual payments specified in the proposed schedule of ruling amounts are based on the reasonable assumptions and determinations used by commission and will result in plr-114614-09 a projected fund balance at the end of the funding_period equal to or less than the amount of decommissioning costs allocable to the fund pursuant to sec_1_468a-3t a taxpayer has demonstrated that by following the assumptions approved by the commissions the proposed schedule of ruling amounts is consistent with the principles of sec_468a and the regulations thereunder and that such schedule is based on reasonable assumptions the maximum amount of cash payments made or deemed made to the fund during any_tax year is restricted to the ruling_amount applicable to the fund as set forth under sec_1_468a-2t b of the regulations based solely on the determinations above we conclude that the taxpayer's proposed schedule of ruling amounts satisfies the requirements of sec_468a of the code approved schedule of ruling amounts year each year --------------- ----------------------------- ------- commission a dollar_figure---------------- commission b dollar_figure---------------- total dollar_figure---------------- dollar_figure------------- dollar_figure------------- dollar_figure------------- approval of the schedule of ruling amounts is contingent on there being no change in the facts and circumstances known or assumed at the time the current ruling is issued if any of the events described in sec_1_468a-3t f occur in future years the taxpayer must request a review and revision of the schedule of ruling amounts generally the taxpayer is required to file such a request on or before the deemed payment deadline date for the first taxable_year in which the rates reflecting such action became effective when no such event occurs the taxpayer must file a request for a revised schedule of ruling amounts on or before the deemed payment deadline of the tenth taxable_year following the close of the tax_year in which the most recent schedule of ruling amounts was received except as specifically determined above no opinion is expressed or implied concerning the federal_income_tax consequences of the transaction described above this ruling is directed only to the taxpayer who requested it sec_6110 of the code provides it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representatives we are also sending a copy of this letter_ruling to the director pursuant to sec_1_468a-7t a a copy of this letter must be attached with the plr-114614-09 required election statement to the taxpayer's federal_income_tax return for each tax_year in which the taxpayer claims a deduction for payments made to the fund sincerely peter c friedman senior technician reviewer branch passthroughs special industries cc