Court Opinion

ID: 17981
Source: CourtListenerOpinion
Date Created: 2010-04-25 07:09:37+00
Date Added: 2024-06-11T15:04:25.957745
License: Public Domain

UNITED STATES COURT OF APPEALS

                        FOR THE FIFTH CIRCUIT

                            No. 98-60128
                          Summary Calendar

   LINDA EVANS, and Estate of Robert C. Evans, Jr., deceased,
                      Linda Evans Executrix,

                                                Petitioner-Appellant,

                               VERSUS

                  COMMISSIONER OF INTERNAL REVENUE,

                                                Respondent-Appellee.

               Appeal from the United States Tax Court
                              (2492-97)

                            May 28, 1999
Before DAVIS, DUHÉ, and PARKER, Circuit Judges.
PER CURIAM:*

     Appellants appeal from a United States Tax Court decision

affirming the C.I.R.’s determination of deficiencies in their

jointly filed Federal income tax returns for the years 1989 through

1991. Alternatively, appellant Linda Evans appeals the Tax Court’s

determination that she is not entitled to “innocent spouse” relief

under the tax code.

     *
      Pursuant to 5TH CIR. R. 47.5, the Court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.

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      We review decisions of the Tax Court under the same standards

that apply to district court decisions and, thus, issues of law are

review de novo, and finding of fact are reviewed for clear error.

Park v. Commissioner, 25 F.3d 1289, 1291 (5th Cir.1994).                 The Tax

Court’s determination that a spouse is not entitled to relief as an

“innocent      spouse”     is   reviewable   under    the   clearly    erroneous

standard.      See Park, 25 F.3d at 1291; Reser v. Commissioner, 112
F.3d 1258, 1262 (5th Cir.1997).

      Appellant challenges the Tax Court’s refusal to allow her to

avoid tax liability under the “innocent spouse” provisions of the

tax code.       When this case was decided by the Tax Court, those

provisions were found at IRC section 6013(e), which predicated

relief on the claimant establishing that (1) a joint return had

been filed, (2) there was a substantial understatement of tax due

to grossly erroneous items of the other spouse, (3) the claimant

had no knowledge of the understatement, and (4) it would be

inequitable to hold the claimant liable for the tax.

      In this case there is no dispute that appellant filed a joint

return.   In rejecting appellant’s claim for innocent spouse relief

in   regards    to   the    royalty   income,   the   Tax   Court     found   that

appellant had failed to establish a “substantial understatement” of

tax as required in element number two.           The IRS Restructuring and

Reform Act of 1998, however, has removed the old statute, and its

replacement eliminates the requirements that the understatement be

“substantial” and that there must have been “grossly erroneous”

items.    See IRC § 6015(b); CASEY, FEDERAL TAX PRACTICE § 3.21 (West

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1998).    Section 6015(b) became effective July 22, 1998 and applies

to any tax liability remaining unpaid as of such date.          Therefore,

as to the royalty income, we REVERSE and REMAND for further

determination under the new provisions of section 6015(b).

     As to the Tax Court’s determination that appellant is not

entitled to innocent spouse relief in regards to deficiencies

attributable to the 1989 cattle sale, we AFFIRM.          No clear error is

apparent in the Tax Court’s determination that Appellant failed to

establish a lack of knowledge of the sale.          In an omitted income

situation such as this, the taxpayer need only know about the

underlying    income-producing   transaction   to    be    precluded   from

relief.    See Reser, 112 F.3d at 1265.

     The Tax Court’s findings of deficiency with respect to the oil

and gas royalty and cattle sale transactions also do not reveal

clear error. Therefore, we AFFIRM the Tax Court’s determination of

the underlying tax liability, insofar as Appellant Linda Evans is

not determined to be entitled to “innocent spouse” relief upon

remand.

     The Tax Court’s refusal to allow appellants to re-open the

record to establish Linda Evans’ adjusted gross income affects the

inquiry only under the analysis of former IRC section 6013(e).

Because appellant’s “innocent spouse” defense will be re-analyzed

under IRC section 6015(b), we DISMISS this issue as MOOT.

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