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this opinion should not be published and is not precedent except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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