T.C. Memo. 2007-299
UNITED STATES TAX COURT
ROBERT H. AND JUDITH A. GOLDEN, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent*
Docket No. 16694-04L. Filed October 1, 2007.
Robert H. Golden and Judith A. Golden, pro sese.
Elizabeth R. Proctor and A. Gary Begun, for respondent.
SUPPLEMENTAL MEMORANDUM FINDINGS OF FACT AND OPINION
LARO, Judge: This case is a collection case commenced under
section 6330(d)(1) relating to petitioners’ 1974 and 1977 through
*
This opinion supplements our prior Memorandum Opinion,
Golden v. Commissioner, T.C. Memo. 2005–170.
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1981 Federal income tax.1 In Golden v. Commissioner, T.C. Memo.
2005-170, the Court decided for respondent through partial
summary adjudication all issues in this case, but for the
correctness of respondent’s denial of a section 6015 claim to
relief (spousal relief) made by Judith A. Golden (petitioner).
We now decide whether respondent abused his discretion in denying
petitioner’s claim to spousal relief.2 We hold he did not.
FINDINGS OF FACT
Petitioner and Robert H. Golden (Golden) are married and
resided in Southfield, Michigan, when their petition was filed
with the Court. Petitioner holds a college degree and worked as
an elementary schoolteacher from 1964 to 1969. In 1984, she
completed a course in income tax preparation. Golden is a
practicing attorney and has practiced law since 1961.
In the mid-1970s, Golden invested in a partnership on behalf
of petitioners. Petitioners were each limited partners in the
partnership, and they each received annual reports from the
1
Unless otherwise noted, section references are to the
applicable versions of the Internal Revenue Code, and Rule
references are to the Tax Court Rules of Practice and Procedure.
2
Petitioners invite the Court also to decide an issue as to
the proper interest rate applicable in this case. We decline to
do so. As just noted, the Court decided in Golden v.
Commissioner, T.C. Memo. 2005-170, that respondent will prevail
in this case if the Court holds for respondent as to the spousal
relief claim. We also note that petitioners are deemed to have
stipulated under Rule 91(f) that the only issue left to be
decided is whether petitioner is entitled to spousal relief.
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partnership accompanied by Schedules K-1, Partner’s Share of
Income, Deductions, Credits, etc., reporting their shares of
partnership losses. Petitioners never realized any income from
their investments in the partnership.
Petitioners claimed on their joint Federal income tax
returns for the subject years deductions for their distributive
shares of losses reported by the partnership. At all relevant
times, petitioner knew about her investment in the partnership,
and she knew that she was a limited partner. In 1981, respondent
notified petitioners that the partnership was under investigation
and that losses generated by the partnership might be disallowed.
After 1981, petitioners ceased deducting losses from the
partnership on their Federal income tax returns.
Respondent disallowed the partnership loss deductions
petitioners claimed on their Federal income tax returns for the
subject years. The disallowance resulted in the deficiencies in
tax for which petitioner seeks spousal relief. Those
deficiencies were assessed pursuant to stipulated decisions
entered by this Court in a deficiency suit brought by
petitioners.
During the subject years, petitioner was responsible for
balancing the couple’s checkbook, and she had full access to
their joint bank accounts. She was not abused physically or
mentally by Golden during those years.
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OPINION
Spouses filing a joint Federal income tax return are
generally jointly and severally liable for tax found to be
owning. Sec. 6013(d)(3); Butler v. Commissioner, 114 T.C. 276,
282 (2000). However, it is possible for an individual filing a
joint return to be relieved of joint and several liability.
Section 6015 prescribes three types of relief: (1) Full or
apportioned relief under section 6015(b), (2) proportionate
relief under section 6015(c), and (3) equitable relief under
section 6015(f). Petitioner claims entitlement to one or all of
these types of relief. Except as otherwise provided in section
6015, petitioner bears the burden of proving that claim. See Alt
v. Commissioner, 119 T.C. 306, 311 (2002), affd. 101 Fed. Appx.
34 (6th Cir. 2004); see also Rule 142(a)(1).
To qualify for relief under section 6015(b), a requesting
spouse needs to satisfy the requirements of section 6015(b)(1).
Under section 6015(b)(1), relief may be granted under section
6015(b) if the following requirements are met: (1) A joint
return has been made for the taxable year, (2) on such return
there is an understatement of tax attributable to erroneous items
of one individual filing the joint tax return, (3) the spouse
seeking relief establishes that in signing the return he or she
did not know, nor have reason to know, that there was an
understatement of tax, and (4) taking into account all of the
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facts and circumstances, it is inequitable to hold the requesting
spouse liable for the deficiency in tax for the taxable year
attributable to the understatement. The requesting spouse’s
failure to meet any one of these requirements prevents him or her
from qualifying for full or apportioned relief under section
6015(b). Alt v. Commissioner, supra at 313.
Petitioner does not meet the second, third, or fourth
requirement for full or apportioned relief under section 6015(b).
The erroneous items, the losses from the partnership, are not
attributable solely to Golden. Petitioner admits that the
investment in the partnership was explained to her and that she
was aware of her status as a limited partner. She further admits
that she received the annual reports from the partnership listing
her losses, that Golden truthfully discussed the partnership with
her regularly, and that she willingly signed the tax returns for
the subject years without reviewing them. As to the latter
point, a reasonably prudent person in the position of petitioner,
a college-educated individual, would have reviewed each return
and at least inquired about the losses reported each year. As
this Court has previously stated in similar settings, a spouse
cannot escape tax responsibilities by ignoring the contents of a
tax return when signing it. See Mora v. Commissioner, 117 T.C.
279, 289 (2001); Albin v. Commissioner, T.C. Memo. 2004-230; see
also Levin v. Commissioner, T.C. Memo. 1987-7. Given that
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petitioner has a college degree, that she had full access to
joint bank accounts, that she balanced the couple’s checkbook,
that she knew of her status as a limited partner in the
partnership, and that she failed to discharge her duty of
inquiry, petitioner is deemed to have had reason to know of the
understatements on the income tax returns for the years at
issue.3 We conclude that petitioner does not qualify for relief
under section 6015(b).
Section 6015(c) allows a qualifying individual to receive
proportionate relief from joint and several liability for a
deficiency if, in addition to meeting other conditions, upon
electing relief under section 6015(c), the individual is divorced
or legally separated from the other spouse or has lived apart
from the other spouse for the past 12 months. Petitioner fails
to meet this requirement. She is still married to and living
with Golden. We conclude that petitioner does not qualify for
relief under section 6015(c).
Because we hold that petitioner is not entitled to either
full or proportionate relief under subsection (b) or (c) of
section 6015, we now consider whether she is entitled to
equitable relief. Under section 6015(f), the Commissioner may
grant equitable relief to an individual if relief is not
3
As to the fourth requirement of sec. 6015(b), petitioner
has not presented any evidence that it would be inequitable to
hold her liable for the deficiencies for the subject years.
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available to the individual under section 6015(b) or (c) and it
would be inequitable to hold the individual liable for the tax
liability.4 Petitioner bears the burden of proving that
respondent’s denial of her claim was an abuse of respondent’s
discretion. See Washington v. Commissioner, 120 T.C. 137, 146
(2003); Cheshire v. Commissioner, 115 T.C. 183, 198 (2000). In
order to prevail, petitioner must demonstrate that respondent
exercised his discretion arbitrarily, capriciously, or without
sound basis in fact or law when he denied her the equitable
relief. See Jonson v. Commissioner, 118 T.C. 106, 125 (2002),
affd. 353 F.3d 1181 (10th Cir. 2003).
Before the Commissioner will consider a taxpayer’s request
for relief under section 6015(f), the taxpayer must satisfy all
seven threshold conditions listed in Rev. Proc. 2003-61, sec.
4.01, 2003-2 C.B. 296, 297.5 These conditions are as follows:
(1) The requesting spouse filed a joint return for the taxable
4
This Court has held that our determination of whether a
taxpayer is entitled to relief under sec. 6015(f) “is made in a
trial de novo and is not limited to matter contained in
respondent’s administrative record”. See Ewing v. Commissioner,
122 T.C. 32, 44 (2004), vacated 439 F.3d 1009 (9th Cir. 2006).
That decision was vacated for lack of jurisdiction. We need not
and do not decide here whether our review of respondent’s denial
of relief under sec. 6015(f) is limited to the administrative
record because our holding would remain the same in any event.
5
Although the deficiencies in tax arose in years before the
revenue procedure’s effective date of Nov. 1, 2003, this revenue
procedure is applicable to petitioner’s case as her request for
relief was made after Nov. 1, 2003.
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year for which he or she seeks relief, (2) relief is not
available to the requesting spouse under section 6015(b) or (c),
(3) the requesting spouse applies for relief no later than 2
years after the date of the Commissioner’s first collection
activity after July 22, 1998, with respect to the requesting
spouse, (4) no assets were transferred between the spouses as
part of a fraudulent scheme by the spouses, (5) the nonrequesting
spouse did not transfer disqualified assets to the requesting
spouse, (6) the requesting spouse did not file or fail to file
the return with fraudulent intent, and (7) the income tax
liability from which the requesting spouse seeks relief is
attributable to an item of the individual with whom the
requesting spouse filed the joint return. Petitioner fails to
satisfy the last condition; i.e., that the income tax liability
from which the requesting spouse seeks relief be attributable to
an item of the individual with whom the requesting spouse filed
the joint return.
Petitioners were both limited partners in the partnership,
and petitioner was aware of this fact. Thus, the item giving
rise to the losses, petitioner’s investment in the partnership,
is not attributable to Golden alone. Rather, that item is
attributable to both of them. We conclude that petitioner does
not qualify for relief under section 6015(f). See Schwendeman v.
Commissioner, T.C. Memo. 2007-227.
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We have considered all petitioners’ arguments for holdings
contrary to those expressed herein and reject those arguments not
discussed herein as irrelevant or without merit.
Decision will be entered
for respondent.