Court Opinion

ID: 4333247
Source: CourtListenerOpinion
Date Created: 2018-11-14 01:06:34.862563+00
Date Added: 2024-06-11T10:06:07.588382
License: Public Domain

116 T.C. No. 21

                  UNITED STATES TAX COURT

   MICHAEL VETRANO AND PATRICIA VETRANO, Petitioners v.
       COMMISSIONER OF INTERNAL REVENUE, Respondent*

     Docket No. 8996-97.                Filed April 25, 2001.

          In the petition, petitioners alleged that
     wife, W, was entitled to relief from joint and
     several liability under former sec. 6013(e),
     I.R.C., with respect to their joint return for
     1993. After trial, sec. 6015, I.R.C., was
     enacted into law and former sec. 6013(e), I.R.C.,
     was repealed. W elected relief under subsections
     (b) and (c) of sec. 6015, I.R.C., in petitioners'
     posttrial brief. Thereafter, the Court issued
     its first opinion which decided all of the other
     issues in the case but reserved W's qualification
     for relief from joint and several liability in
     order to give W an opportunity to make a record
     to support her elections under subsections (b)
     and (c) of sec. 6015, I.R.C. Subsequently, W
     requested leave to withdraw, without prejudice,
     her elections for relief under sec. 6015(b) and

     *
      This opinion supplements our opinion in Vetrano v.
Commissioner, T.C. Memo. 2000-128.
                             - 2 -

    (c), I.R.C., and chose not to present any
    additional evidence regarding those issues.
    R contends that W should not be permitted to
    withdraw, without prejudice, her elections under
    sec. 6015(b) and (c), I.R.C., and that W is not
    entitled to relief under either of those
    provisions.
         1. Held: W's request to withdraw, without
    prejudice, the issue of her qualification for
    relief under subsections (b) and (c) of sec.
    6015, I.R.C., is denied. W placed those matters
    in issue in this case. Sec. 6015(g)(2), I.R.C.,
    prescribes the res judicata effect that a final
    decision in this case will have with respect to a
    later election by W under sec. 6015, I.R.C., and
    precludes granting W's request to withdraw her
    elections without prejudice.
         2. Held, further, W does not qualify for
    relief under subsection (b) of sec. 6015, I.R.C.,
    nor has she shown that she meets the requirements
    of sec. 6015(c)(3)(A)(i), I.R.C., in order to be
    entitled to elect relief under sec. 6015(c),
    I.R.C.

     John R. Crayton, for petitioners.

     Keith L. Gorman and John E. Becker, Jr., for

respondent.

                      SUPPLEMENTAL OPINION

     WHALEN, Judge:    Our Memorandum Findings of Fact and

Opinion of this case was issued as T.C. Memo. 2000-128

on April 10, 2000 (Vetrano I).    In that opinion, we found

that Mr. Vetrano had earned unreported net income in 1991,

1992, and 1993, from his business of dealing in used

automobile parts, consisting primarily of payments from a

company referred to as BMAP, that he is subject to self-

employment tax on the unreported net income of his used
                            - 3 -

automobile parts business, that the returns at issue are

subject to the fraud penalty under section 6663, and that

some part of the underpayment for 1993 is due to the fraud

of Mrs. Vetrano.   We also sustained respondent's

determination that petitioners had received unreported

payments from four entities during the years in issue,

including a payment of $1,035 from Camden City Probation

in 1993.

     In Vetrano I, we did not consider Mrs. Vetrano's

claim for relief from joint and several liability under

former section 6013(e) and section 6015 of the Internal

Revenue Code.   We reserved those issues in order to give

Mrs. Vetrano an opportunity to make a record to support her

claim of eligibility for relief under section 6015, in view

of the fact that section 6015 was enacted after the trial

of this case.   See Internal Revenue Service Restructuring

and Reform Act of 1998, Pub. L. 105-206, sec. 3201(a), 112

Stat. 734 (hereinafter the Act is referred to as RRA 1998).

Unless stated otherwise in this opinion, all section

references, other than references to section 6015, are

references to the Internal Revenue Code as in effect during

1993.

     We must now decide three issues in order to complete

our opinion in this case.   The first issue is whether to
                            - 4 -

grant Mrs. Vetrano's request to withdraw from the case,

without prejudice, the issue of Mrs. Vetrano's eligibility

for relief from joint and several liability under former

section 6013(e) and section 6015.      The second issue is

whether Mrs. Vetrano is eligible for relief under section

6015(b), and the third issue is whether Mrs. Vetrano is

eligible for relief under section 6015(c), as of the date

of her election or as of some later date.

                          Background

     Petitioners in this case make the following

allegation:   "For the tax year 1993 Mrs. Vetrano asserts

the protection afforded to her * * * under the provisions

of 26 U.S.C. §6013(e)."   Respondent denied that allegation

in the answer.   Sometime later, respondent served a request

for admissions on petitioners.   Included in that request is

the following specification:   "Petitioner-wife is not

entitled to * * * [such] relief."      Petitioners denied that

specification in their response.    The case proceeded to

trial on the basis of those pleadings.

     In petitioners' posttrial brief, petitioners argued in

detail that "Mrs. Vetrano qualifies for * * * relief under

26 U.S.C. §6013(e)".   In addition, Mrs. Vetrano elected and

asserted that she is entitled to relief from joint and
                            - 5 -

several liability under section 6015 with respect to

petitioners' 1993 return.

     In reply, respondent construed Mrs. Vetrano's

posttrial brief as an election for relief under both

subsections (b) and (c) of section 6015.   As to relief

under section 6015(b), respondent noted that petitioners

bear the burden of proving that Mrs. Vetrano did not know,

and had no reason to know of the payments by BMAP to her

husband, and respondent argued that the record contains

ample evidence to prove that Mrs. Vetrano knew of her

husband's unreported income from BMAP.   Respondent also

argued that it would not be inequitable to hold

Mrs. Vetrano liable for the deficiency in tax for 1993.

Accordingly, respondent "determined that Mrs. Vetrano is

not eligible to elect application of §6015(b) and therefore

denies her claim to limit her liability under that

section."

     As to relief under section 6015(c), respondent noted

that petitioners had not shown that Mrs. Vetrano met a

threshold requirement for eligibility, set forth in section

6015(c)(3)(A)(i), to elect section 6015(c) relief.

Respondent's brief states as follows:

          Mrs. Vetrano made her election on page 12
     of petitioners' brief. A copy of the divorce
     petition filed on August 7, 1998 was attached
                            - 6 -

     to that brief. The brief also contains a
     statement that under I.R.C. §6015(c)(3)(A)(i)
     (I), Mrs. Vetrano is "legally separated from"
     Mr. Vetrano.

            *     *     *     *     *     *     *

          Petitioner based her eligibility upon being
     legally separated from Michael Vetrano.
     §6015(c)(3)(A)(i)(I). However, the mere filing
     of a divorce petition does not constitute legal
     separation. See Morrison v. Morrison, 122 N.J.
     Super. 277, 300 [sic]; 290 [sic] A.2d 741 [sic]
     (Ch. 1972). Nor has she supplied any evidence
     to support the statement in the brief that she
     was so legally separated. For that reason, she
     was not eligible to make the election.

Respondent also argued that Mrs. Vetrano is not eligible

to elect relief under section 6015(c) because Mr. Vetrano

transferred assets to her as part of a fraudulent scheme

to avoid tax and, pursuant to section 6015(c)(3)(A)(ii),

an election under section 6015(c) by either of them is

invalid.   Respondent raised other issues to defeat or to

limit relief under section 6015(c), including the

contention that Mrs. Vetrano had actual knowledge of the

items giving rise to the deficiency with the result that

her election under section 6015(c) does not apply to any

part of the deficiency, see sec. 6015(c)(3)(C), the

contention that her share of the deficiency must be

increased by the value of any "disqualified asset" that was

transferred to her, sec. 6015(c)(4)(A), and the contention

that under section 6015(d)(3)(C) "all of the unreported
                             - 7 -

items giving rise to the tax deficiency should be allocated

to her since she actively participated in the fraud."

     Following release of Vetrano I, the Court issued an

order directing the parties to advise the Court of the

action necessary to decide the issue of Mrs. Vetrano's

relief from joint and several liability with respect to

petitioners' joint return for 1993.     Through her attorney,

Mrs. Patricia Vetrano filed a response asking the Court

"to withdraw, without prejudice, her request that the Tax

Court rule whether or not she is entitled to * * * [such]

relief."

     In response to the Court's order, respondent asked

the Court not to permit Mrs. Vetrano to withdraw the issue

from the case without prejudice.     According to respondent,

Mrs. Vetrano "cannot withdraw her * * * claim because the

Internal Revenue Service has already made a determination

that her claim is denied."   Respondent also asked the Court

to deny Mrs. Vetrano's claim for relief under section

6015(b) principally on the ground that there is sufficient

evidence in the record to show that at the time she signed

the return for 1993, she knew of each income item giving

rise to the deficiency for that year.

     In discussing section 6015(c), respondent repeated the

argument made in respondent's reply brief that Mrs. Vetrano
                            - 8 -

had not established her eligibility to elect relief under

section 6015(c) because she had not established either that

she was no longer married to, or was legally separated

from, Mr. Vetrano at the time she elected under section

6015(c), nor had she established that she was not a member

of the same household at any time during the 12-month

period ending on the date she made her election under

section 6015(c).   See sec. 6015(c)(3)(A)(i).   Respondent

also repeated the arguments that Mrs. Vetrano's election

under section 6015(c) does not apply to any part of the

deficiency because Mrs. Vetrano had actual knowledge of

all of the items giving rise to the deficiency, see sec.

6015(c)(3)(C), that her share of the deficiency should be

increased by the value of certain "disqualified assets"

that Mr. Vetrano transferred to her, sec. 6015(c)(4)(A),

and that Mrs. Vetrano should remain jointly and severally

liable for the deficiency at issue because of her fraud,

see sec. 6015(d)(3)(C).   Respondent did not repeat the

argument that Mrs. Vetrano is ineligible to elect relief

under section 6015(c) because assets were transferred to

her by her husband as part of a fraudulent scheme.    See

sec. 6015(c)(3)(A)(ii).

     Thereafter, the Court issued an order giving the

parties 30 days in which to request further trial in this
                             - 9 -

case with respect to Mrs. Vetrano's eligibility for relief

under section 6015.   In that order, the Court noted that if

further trial were not held, pursuant to the request of the

parties, then the case would remain submitted on the basis

of the existing record.    Petitioners filed no report in

response to the Court's order and, thus, did not request

further trial.

     Respondent's response to the Court's order "requests

that further trial be held as to Patricia Vetrano's

qualification to claim relief under §6015(c), the value of

assets transferred to her under §6015(c)(4), and any other

facts the Court may need to make a decision on the merits."

Respondent also makes the following concession:

     In addition, respondent now understands that
     petitioners were divorced on February 2, 1999
     and, to save time, respondent would now concede
     that she is now divorced and she is entitled to
     make a claim under I.R.C. §6015(c)(3)(A)(i).

                           Discussion

     At the outset, we note that former section 6013(e)

was stricken from the Internal Revenue Code upon the

passage of section 6015.    See RRA 1998 sec. 3201(e)(1), 112

Stat. 740.   This change applies to any tax liability which

arose after the date of enactment of RRA 1998; i.e., July

22, 1998, or any tax liability which arose before such date
                           - 10 -

but which remained unpaid as of such date.     See RRA 1998

sec. 3201(g)(1), 112 Stat. 740.     Following passage of

section 6015, petitioners could no longer seek relief from

joint and several liability for Mrs. Vetrano with respect

to their joint return for 1993 under former section

6013(e).   See King v. Commissioner, 115 T.C. 118, 121

(2000); Butler v. Commissioner, 114 T.C. 276, 282 (2000);

cf. Miller v. Commissioner, 115 T.C. 582 (2000).

     As mentioned above, Mrs. Vetrano elected relief under

section 6015 in petitioners' posttrial brief.    Petitioners'

entire argument regarding Mrs. Vetrano's eligibility for

relief under section 6015 is as follows:

          Should this Court determine that Mr. Vetrano
     received the income from BMAP in 1993 and that
     Mrs. Vetrano is not entitled to the protection
     afforded to her under 26 U.S.C. § 6013(e),
     Mrs. Vetrano hereby elects relief from the joint
     liability on the 1993 return under 26 U.S.C. §
     6015. A copy of that provision is attached as
     Exhibit "A". Pursuant to § 6015(c)(3)(A)(i)(I),
     Mrs. Vetrano is "legally separated from"
     Mr. Vetrano. Attached as Exhibit "B" is a copy
     of the divorce complaint which was filed against
     her husband in the Camden County Superior Court
     on August 7, 1998. [Emphasis supplied.]

Petitioners did not seek to formally amend their petition

to include relief under section 6015 as an issue in this

case, but the parties and the Court have treated it as

having been placed at issue.   In these circumstances, we
                          - 11 -

treat Mrs. Vetrano's election of relief under section 6015

as an amendment to the petition placing section 6015 at

issue in these proceedings.     Cf. Corson v. Commissioner,

114 T.C. 354, 363-364 (2000); Charlton v. Commissioner,

114 T.C. 333, 338-339 (2000).

     The first issue for decision in this Supplemental

Opinion is Mrs. Vetrano's request to withdraw, without

prejudice, the issue of whether she is entitled to relief

from joint and several liability under section 6015.    By

asking to withdraw this issue "without prejudice", it is

evident that Mrs. Vetrano wants to preserve her right to

elect relief under section 6015(b) or (c) at a later time.

     In considering Mrs. Vetrano's request, we note section

6015(g)(2), which provides as follows:

          Res judicata.-–In the case of any election
     under subsection (b) or (c), if a decision of a
     court in any prior proceeding for the same
     taxable year has become final, such decision
     shall be conclusive except with respect to the
     qualification of the individual for relief which
     was not an issue in such proceeding. The
     exception contained in the preceding sentence
     shall not apply if the court determines that the
     individual participated meaningfully in such
     prior proceeding.

The above provision prescribes the effect that a final

court decision for a particular taxable year will have on

a subsequent election by the taxpayer under subsection (b)
                             - 12 -

or (c) of section 6015 for the same taxable year.       By its

terms, an individual cannot make an election under section

6015(b) or (c) for any taxable year that is the subject of

a final court decision, unless the individual's qualifica-

tion for relief under section 6015(b) or (c) was not an

issue in the prior court proceeding and the individual did

not participate meaningfully in the prior proceeding.        See

sec. 6015(g)(2).    Stated differently, an individual who

participated meaningfully in a court proceeding is

precluded from electing relief under section 6015(b) or

(c) for the same taxable year after the decision of the

court becomes final, whether or not the individual's

qualification for relief under section 6015(b) or (c)

was an issue in the prior proceeding.      See sec. 6015(g)(2).

     Section 6015(g)(2) was originally enacted as section

6015(e)(3)(B) by RRA 1998 sec. 3201(a), and, as mentioned

above, became effective as to any liability for tax that

remained unpaid as of the date of enactment of that Act,

July 22, 1998.     See RRA 1998 sec. 3201(g)(1).   As

originally enacted, this provision was expressly applicable

only to decisions of this Court.      See former sec.

6015(e)(3)(B), as enacted by RRA 1998.      In considering

technical amendments to RRA 1998, Congress wanted to make

it clear that a petition for review by the Tax Court, as
                            - 13 -

provided by section 6015(e), sometimes referred to as a

stand-alone proceeding, was not the exclusive procedure for

review of issues involving section 6015 but was an

additional avenue "by which innocent spouse relief could be

considered."    See H. Conf. Rept. 106-1033, at 1023 (2000).

To effectuate that intent, Congress deleted the reference

to the Tax Court in the above res judicata provision so

that it would apply to a final decision of any court, and

Congress moved the provision from subsection (e) of section

6015, which applies only to the Tax Court, to subsection

(g).    See Consolidated Appropriations Act, 2001, Pub. L.

106-554, sec. 1(a)(7), 114 Stat. 2763. (Hereinafter

referred to as Consolidated Appropriations Act, 2001).

This amendment to RRA 1998 became effective on December 21,

2000.    See id., sec. 313(f), 114 stat. 2763A-643.

       In discussing the proper time to elect relief under

section 6015, the conference report that accompanied the

Consolidated Appropriations Act, 2001, states as follows:

       Congress did not intend that taxpayers be
       prohibited from seeking innocent spouse relief
       until after an assessment has been made; Congress
       intended the proper time to raise and have the
       IRS consider a claim to be at the same point
       where a deficiency is being considered and
       asserted by the IRS. This is the least
       disruptive for both the taxpayer and the IRS
       since it allows both to focus on the innocent
       spouse issue while also focusing on the items
       that might cause a deficiency. It also permits
                             - 14 -

     every issue, including the innocent spouse issue,
     to be resolved in single administrative and
     judicial process. The bill clarifies the
     intended time by permitting the election under
     (b) and (c) to be made at any point after a
     deficiency has been asserted by the IRS.
     [Emphasis supplied.]

H. Conf. Rept. 106-1033, at 1023 (2000).   Thus, Congress

expressed the view that taxpayers should be limited to a

single administrative and judicial process to resolve

issues under section 6015.

     Before section 6015(g)(2) and its predecessor were

enacted, if a court decision had become final as to a

particular taxable year, the taxpayer could be barred under

the doctrine of res judicata from seeking relief from joint

and several liability in a later proceeding for the same

taxable year.   See, e.g., United States v. Bryant, 15 F.3d

756, 758 (8th Cir. 1994); United States v. Shanbaum, 10

F.3d 305, 313-314 (5th Cir. 1994); United States v.

Helmick, 58 AFTR2d 86-5280, 86-1 USTC par. 9450 (M.D. Pa.

1986).    See generally Commissioner v. Sunnen, 333 U.S. 591

(1948).   This was true whether or not relief from joint and

several liability had been an issue in the prior court

proceeding.   See United States v. Shanbaum, supra.    Section

6015(g)(2) and its predecessor change the result that

obtained under prior law by permitting an individual who

had not participated meaningfully in the prior court
                            - 15 -

proceeding to elect relief under section 6015(b) or (c), as

long as the individual's qualification for relief under

section 6015(b) or (c) was not an issue in the prior court

proceeding.

     Petitioners raised Mrs. Vetrano's qualification for

relief under both section 6015(b) and (c) as an issue in

this proceeding.    Section 6015(g)(2) governs the effect

that a final decision in this case will have on a later

election by Mrs. Vetrano under section 6015(b) or (c).

We have no authority to override section 6015(g)(2) or

vary its terms.    Thus, we have no authority to grant

Mrs. Vetrano's request for leave to withdraw her election

under section 6015 as an issue in this case "without

prejudice".   Accordingly, we consider Mrs. Vetrano's

election of relief from joint and several liability under

section 6015.   Moreover, the concerns about judicial

economy as expressed by Congress in the legislative

history, the Consolidated Appropriations Act, 2001, quoted

above, and fairness to the parties support our reaching the

issue on the merits.

     In making her election under section 6015,

Mrs. Vetrano did not limit the election to subsection (b)

or subsection (c).   We shall treat it as an election under

both subsections.    The second issue in this Supplemental
                             - 16 -

Opinion is whether Mrs. Vetrano is eligible for relief

under section 6015(b).     Section 6015(b) is applicable to

all joint filers who elect relief under that subsection and

who establish that they meet the four other requirements

set forth therein.     The other requirements are similar to

the requirements that were prescribed by former section

6013(e).   See Butler v. Commissioner, 114 T.C. at 283.

     One of those requirements is that the individual

seeking relief under section 6015(b) establish "that in

signing the return he or she did not know, and had no

reason to know" that there was an understatement

attributable to the erroneous items of the other spouse.

Sec. 6015(b)(1)(C); see Cheshire v. Commissioner, 115 T.C.

183, 192-193 (2000).    Notwithstanding the individual's

knowledge or reason to know of some part of the

understatement, section 6015(b)(2) permits the individual

to qualify for relief as to the remainder of the

understatement, if the individual establishes that in

signing the return he or she did not know, and had no

reason to know, the extent of the understatement.    See sec.

6015(b).   In that case, the individual will be relieved of

liability for tax "to the extent that such liability is

attributable to the portion of such understatement of which
                            - 17 -

such individual did not know and had no reason to know."

Sec. 6015(b)(2).

     We agree with respondent that the record of this case

demonstrates that Mrs. Vetrano knew of the portion of the

understatement that is attributable to the payments

received from BMAP.    Petitioners admitted that "petitioner-

wife was aware of all the payments that BMAP made to

petitioner-husband."    As to the remainder of the

understatement, petitioners failed to introduce any

evidence to show that Mrs. Vetrano did not know and had no

reason to know of the unreported payment from Camden City

Probation.   Therefore, we agree with respondent that

Mrs. Vetrano is not eligible for relief under section

6015(b) as to any part of the understatement.

     As to relief under section 6015(c), the third issue

in this Supplemental Opinion, section 6015(c)(3)(A) imposes

certain conditions for eligibility to elect relief under

that subsection.   To meet the first such condition, the

taxpayer must prove that he or she is no longer married to,

or is legally separated from, the person with whom the

joint return was made, or must prove that he or she was not

a member of the same household with such individual during

the 12-month period ending on the date the election is

filed.   See sec. 6015(c)(3)(A)(i).
                            - 18 -

     As to this first condition for electing relief under

section 6015(c), petitioners' posttrial brief states as

follows:

     Pursuant to §6015(c)(3)(A)(i)(I), Mrs. Vetrano is
     'legally separated from' Mr. Vetrano. Attached
     as exhibit 'B' is a copy of the divorce complaint
     which was filed against her husband in the Camden
     County Superior Court on August 7, 1998.

The complaint for divorce attached as exhibit B to

petitioners' brief purports to have been filed in the State

court 12 days before the date on which petitioners'

posttrial brief was filed in this Court.    There is no

evidence that Mrs. Vetrano was divorced from Mr. Vetrano

or became legally separated from him during that 12-day

period.    Furthermore, petitioners do not allege that

Mrs. Vetrano was not a member of the same household as

Mr. Vetrano during the 12-month period ending on the date

of her election under section 6015(c).   In this regard,

we note that, according to the complaint for divorce,

Mrs. Vetrano sought a divorce on the grounds of extreme

cruelty, pursuant to N.J. Stat. Ann. sec. 2A:34-2(c)

(West 2000).   She did not seek divorce on the grounds of

separation for a period of at least 18 or more consecutive

months, a separate ground for divorce under the New Jersey
                           - 19 -

divorce statute.   See N.J. Stat. Ann. sec. 2A:34-2(d) (West

2000).

     The language of section 6015(c)(3)(A)(i) makes it

clear that this eligibility requirement must be met as of

the date the election is filed.     Section 6015(c)(3)(A)

(i)(I) states that the electing spouse must be divorced or

legally separated "at the time such election is filed" and

section 6015(c)(3)(A)(i)(II) states that the electing

spouse must not have been a member of the same household

with the nonelecting spouse "during the 12-month period

ending on the date such election is filed".     If the

taxpayer does not meet one of those requirements as of the

date of the election, then the taxpayer is not eligible to

elect relief under section 6015(c).     See sec. 6015(c)(3)

(A)(i).   In that event, it would appear that the taxpayer

must file a second election when he or she meets the

requirements of section 6015(c)(3)(A)(i).

     There is no basis in the record of this case for the

statement in petitioners' posttrial brief that Mrs. Vetrano

was legally separated from Mr. Vetrano at the time

petitioner's posttrial brief was filed and her election

under section 6015(c) was made.     Furthermore, there is no

evidence to show that Mrs. Vetrano was no longer married to

Mr. Vetrano on the date of her election, nor is there
                           - 20 -

evidence to show that she had not been a member of the same

household as Mr. Vetrano during the 12-month period ending

on the date of her election.   Therefore, we agree with

respondent that, as of the date on which Mrs. Vetrano filed

her election under section 6015(c):    "She was not eligible

to make the election."   It is unnecessary for us to

consider the other points raised in respondent's reply

brief regarding Mrs. Vetrano's election under section

6015(c).

     As noted above, in response to the Court's order

giving the parties 30 days in which to request further

trial, respondent alleges that petitioners were divorced

after the date on which petitioners filed their posttrial

brief, and, as of that later date, Mrs. Vetrano met the

requirement of section 6015(c)(3)(A)(i)(I) and was

eligible to elect under 6015(c).    Respondent argues that

the Court should permit the parties to present evidence

concerning the date of Mrs. Vetrano's divorce because:

"Even if the initial claim could not be decided on the

basis that it was premature, this new evidence would cure

that problem."

     We agree with respondent that if Mrs. Vetrano became

eligible to elect relief under section 6015(c) after the

date of the first election, then she could make a second
                            - 21 -

election under section 6015(c) and place the issue of her

eligibility for relief under section 6015(c) before the

Court in these proceedings.    We have given her ample

opportunity to do that.    However, the election under

section 6015(c) is Mrs. Vetrano's to make, and she has made

it clear that she does not seek to make a second election.

See sec. 6015(a)(2).    We suspect that Mrs. Vetrano did not

make a second election because there would be little to

gain from a second election.    In Vetrano I, we found that

some part of the underpayment for 1993 was due to

Mrs. Vetrano's fraud based on the fact that "she was aware

of the payments received from BMAP during 1993, and she

played an important part in converting the checks received

from BMAP to cash."    Were we to reach the merits of

Mrs. Vetrano's election under section 6015(c), we, no

doubt, would find her election invalid as to the payments

from BMAP because she had "actual knowledge" of those

payments.   See sec. 6015(c)(3)(C).   Having failed to make a

second election during these proceedings, if Mrs. Vetrano

attempts to make an election under section 6015(c) after

the decision in this case becomes final, then
                          - 22 -

the effect of the Court's decision in this case will be

governed by section 6015(g)(2), as discussed above.

     On the basis of Vetrano I and the above discussion,

                                   Decision will be entered

                              for respondent.