E. Carolyn Mellen, Petitioner

RECOP T.C.. Memo. 2002-280 F L S UNITED STATES TAX COURT E. CAROLYN MELLEN, Petit-ione y. COMMISSIONER OF INTERNAL REVENUE,' Respondent Docket No. 4962-01.

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Filed November 7, 2002.

W. Kevin Jackson, for petitioner.

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R. Craig Schneider, for respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

CHIECHI, Judge: This case arises from a reduest for equitable relief under section 6015 (f)¹ with respect to petitioner's taxable year 1995.

We must decide whether respon- ¹Unless otherwise indiöated, all section references are to t he Internal Revenue Code in effect at all relevant times, arïd all Rule references are to the Tax Court Rules of Practice and Procedure.

SERVED NOV

2002 dent abused respondent's discretion in denying petitioner relief under that section for that year. We hold that - respondent did not abuse respondent's discretion.

FINDINGS OF FACT

Some of the facts have been stipulated and are so found.² At the tidte the petition was filed, petitioner resided in .

Salt Lake City, Utah.

Petitioner and Craig Ricliard Mellen (Mr. Mellen) , who married in 1970, .have five children--Jamie, Rick And ea, Andrew, and Justin--and one grandchild, Jessica, who is Jamie's daughter.

At the time of the trial in this case, those children and 'that grandchild were 32, 28, 26, 25, 23, and 14 years old, respec- tively.

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After petitioner graduated from high school in 1959, she completed a one-year course of study at Henagers Business Col- lege, wheré she took cour es in business shorthand, and English.

After completing that course of study in 1960, petitioner became employed, first as a medical claims clerk and then as a secre- tary.

In 1970, when petitioner and Mr. ,Mellen had their first child, petitioner stopped working and remained unemployed until 1988, -when she accepted a part-time position with Salt Lake 2Unless othbrwise indicated or stated for clarity, all findings of fact and conclusions herein that do not tinies thereof. pertain. to the time of took place on May 14, ,2002.

indicate the the trial in this case that Community College.

Since 1989, Questar InfoComm (Questar) has employed peti- tioner as a secretary, for which she received the following compensation during the years -indicated:

Year 1994 1995 1996 1997 1998 1999 20Ò0 2001 Compensation¹ $19, 7 88 . 11 22, 691.49 25, 791. 07 28,529.83 33,783.53 33, 800. 81 31, 963 . 39 ¹State income tax, but no Federal income tax⁴ was ithheld from the compensat-ion t·hat petitioner received from Questar duding 1994 and 1995. income tax eke withheld from the compensation that peti- tíoner recëived from Questar during 1997, 1998, 1999, 2000, and 2001.

income ta and State Federal 2The record does not disclose the amount of ,peti- tioner' s compensation from Questar during 1996 any Federal income tax or State income tax was that compensation.

, nor whether withhèld from At the time of the trial in this case, petitioner' s annual ompensation from Questar was $38,160.

At all relevant times, petitioner's employment with Questar rovided her, inter alia, certain health and derital benefits as 11 as life and accident insurance and the right to participate É_n a retirement plan (Que tar retirement plan) . Petitioner coñtributed the following amounts to the Questar retirement plan d r ng the years indicated .

Year 1994 1995 1996 1997 1998 1999 2000 2001 Amount Contributed $1, 329 . 15 1, 502 . 82 1, 713 . 93 1, 891. 32 2 , 224 . 62 1,763.05 2, 050 . 00 The record does not disclose the amount, if any, that petitioner contributed to the Questar retirement plan during 1996.

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As of March 2002, petitioner' s monthly contribution to the Questar retifement plan was approximately $191, which Questar was deducting· from her compensation.

After reducing petiticner's annual compensat-ion from Questar, as reported in Form W-2, Wage .and Tax Statement, for each of the years 1994, 1995, and 1997 through 2001, by amounts, ïf aný, for Federal income tax; State income tax, Social Securit-y tax, Medicare tax, the cost of certain group-term life insurance, and contributions to the Questar retirement plan tihat were withheld from such compensation, petitioner's annual net compen- sation from Questar (petitioner' s annual net compensation) for each such .year was $16,735.37, $19,143.07, $21,474.13, $23,634.42, $27,168.47, $25,412.16, and $23,851.05, respectively.

At least as of the tiùté of the . trial in this case, peti- tioner was investing $50 a month in a mutual fund and had a balance in that mutual fund of $500. At least as of March 2002 petitioner was investing approximately -$8 each month, which Questar was deducting from her compensation each month, or approximately $100 each year in savings bonds.³ In April 1999, petitioner underwent surgery for colon cancer.

In June 1999 petitioner again underwent surgery because petitioner's cancer had sp ead to her liver Thereafter,.peti- tioner has had regular checkups to monitor .her recoveryofrom c ancer .

After graduating from high school around 1959, Mr. Mellen, who is .dyslexic, worked as a roofer. At least as early as 1990, Mr. Mellen became engaged in certain activities as an inventor and sometime before 1995 was successful with respect to one of his inventions.

On July 15, 1994, Mr. Mellen was injured in an explosion (July 15, . 1994 accident) .

Some ofs his property was also damag d or destroyed in that explosion. At all relevant times, peti 3In addition to the amounts that we. have already found Questar was deducting from petitioner' s compensation as of Ma ch 2002, Questar was deducting. as of that time the following apphox- imate aniounts each month from petitioner's compensation: .*1) $140 for Federal 13) $186 .for Social Security tax, (5) $96 for hedlth benefits, for reserved parking, accident- State of Utah for State income tax with respect _995, (11) $17 foi a legÃl service plan, loan from t-he Questar retireinent plan, (9) $5 for (10) $300 for a $14, 000 debt owed t-o the to taxable year (12) $168 payment on a (2) $113 for State income tax, (8) $52- for life insúrance (4). $43 for Medicare t-ax, $30 for dential benefits, (13) $173 payment on a income tax, iñsurance, (7) $60 (6 econd loan from the Questar retirement plan, and (14). $77 for a Micro Computer 1" (the.meaning of "Micro Computer 1" is not disclosed by the. record) .

tioner knew about . the July 15, 1994 accident as well as the injuries that Mr.

Mellen suffered and the damage or destruction to his property caused by that accident.

In a letter dated June 10, 1997, tihe Social Security Admin- istration (SSA) determined that Mr. Mellena was disabled, t hat his disability rose as of October 30ï 1996, and that he satisfied the medical requirements for Social Security disability bénefits (SS disability benefits) .

Sometiine after June 10, 1997, the SSA determined that Mr. Mellen satisfied the nonmedical requirements for SS.disability benefits and that he was entitled to such benefits as of April 1997. At a time not disclosed by the record, tihe SSA also determined that Mr. Mellen was .entitled to hospital insurance under Medicare as of April 1999.

From t Áea t March 1999 o the time of the trial in this case, Mr. Mellen received monthly SS disability benefits that ranged from approximately $900 t $949.

At times that are not disclosed by the redord, petitioner and Mr. Mellen -jointly filed Form 1040, U.S.

Individual Income ar Tax Re irn (retubn , for each f t h t axable years 1986 through 1991.

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Sometime aft er October 15, 1996, but before October 23, .996, petitioner and Mr. Mellen jointly filed a return for each of the taxable years 1994 (1994 jointi return)4 and 1995 (1995 joint eturn) .s At times that are hot disclosed by the record, petitioner prepared without the aid of a paid return preparer, and filed returns using married filing separate status for the taxable years 1992, 1993, and 1996 thhough 2000, respectively.

Sometime between September 28, 2001, and April 18, 2002, petitioner prepared, without the aid of a paid return preparer, a.return using head of household status for taxable year 2001 (2001 return) , but did not sign or file that return.

The 1994 joint return reported, inter alia, adjusted gross income of $19, 815, taxable income of $0, compensat-ion of $19, 788 that petitioner received from Questas, taxable interest income of $2, and dividend income of $25.

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The 1995 joint return reported, inter alia, adjusted gross income of $355,340, taxable ir ome of $315,704, compensation o $22, 691 that petitioner received from Questar, taxable intere t O O t 4Petitioner and Mr. Mellen applied for and received exten file the 1994 joint sions until Oct. 15, 1995, within which t return.

SPetitioner and Mr. Mellen applied .for and received extien- sions until Oct. 15, 1996, within which. to file .the 1995 joint return.

· 6In the 2001 return, petitioner claimed Schedule A it mized deductions of $3,051 for State and local - real estate tax, $150 for personal property tax, $691 for mort - gage interest, $3,775 for gifts to-chariisy, and $3,000 for attorney and accounting fees income taxes, $3,106 for income of $35 from Cyprus Credit U ion, dividend income of $19,152,7 and Schedule D capital gain of $500,755 from the sale of certain stock. 8 The 1995 joint return claimed deductions for Schedule A itemized deductions of $39, 636, a Schedule C loss of $127,219 relating to Mr. Mellen's activities as an inventor, a Schedule E loss of $29,144, and a casualty loss of $30,930 as a result of the July 15, 1994 accident that caused damage to, or destéuction of, property that petitioner and Mr. Melle claimed Mr. Mellen used iñ his business (claimed casualty loss deduc- tion) .

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The Schedule A itemized deductions in the 1995 joint return were for claimed State and local income taxes of $147, real estate tax of $2,424, personal. property tax of $100, mórtgage interest of $6,979, and gifts to charity of $37,205. Schedule'A of tlíe 1995 joint return listed $0 as the amount of medical expenses for which petitioner añd Mr. Mellen were not reimbursed by insurance.

The 1995 joint return. showedtotal Federal income tax of $79,467 and such .tax due of $2, 838. Petitioner and Mr. Mellen Schedule B, Interest and Dividend Income, Part II, of 1995 joint return listed Questar among the payors of gross dividends and/or other distributions on stock.

the "In arriving t Schedule D capital gain of $500,755, peti- tióner and Mr. Mellen showedin Schedule D of their 1995 joint return gains and losses froin the sales of stock in the following: "USPN" , and "SYBASE" .

"CWIDE" , "FONR" , "NHT" , " IRC" , "NAM" • lidt noti pay 3ar y Federal income tax at the time they filed the .

1995 joint return.

By Fébruary .3, 1997, petitioner and Mr.

Mellen paid in full the Federal income tax due shown in that return, a penalty, and interest thèreon.

Sometime du ing 997, an agent of respondent- (examining agent) commenced an examination of the 1995 joint return (respon- dent's e amination).

S metimé after that examination àommenced b t before September 8 1998, the examining agent proposed ñine adjùst ments (proposed adjustments) to the 1995 joint return, . Àich inc1pded the proposed disallowance of the claimed casualty loss deduction of $30,930.

As grounds .for that proposed disal- lowance, thé examining agent concluded that if the alleged casualty occurred at all, it occurred during 1994.

Sometime after the examining agent proposed those adjustménts but before September 8,*1998, petitioner and Mr. Mellen disagreed with" the Pr posed adjustments and requested andmad a coñference with the .

Intiernal Revenue. Service (IRS) Appeals Office.

. During that onference, the IRS Appeals Office sustained only one of the adju tments proposed by the examining agent, namely, the proposed disallowance of the claimed casualty loss deduction.

On September 8, 1998, petit-ioner and Mr. Mellen signed Form 870, Waiver of 1Nstrict ions on A sessmenti and Collection of Deficiency in Tax and Acceptance of Ove assessment, in which they agreed to the disallowance of the claimed cäsualty loss deduction .

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for their taxable year .1995 and to the immediate assessment- and collection of a deficienòy of $9,7i⁹ in Federal income tax, a penalty of $486, and inter st as provÈded by law.

On N vember 23, 1998, respondent asse s thobe amount as well as interest accruals thereon.

(We shali refer tÁ tÈto e assessed amouhts as well as interest as provided by law accrued aftér November 23, 1998, as petitioner's unpaid liability for 1995.)

Petitioner did not enter into an installment agreemeht or other arrangement to pay petit-ione$'s unpaid liabilitý for 1995.

Nor did petitioner at any time attempt t-o b rrow ney on an unsecured or secured basis in order to pay petit-ioner' s unpaid liability for 1995.

On March 26, 1999, petitiorier filed wit h respondent- Form 8857, Request for Innocent Spouse Relief (And Separat-i n of Liability and Equitable Relief) , with respect to petitioner's unpaid liability for 1995.

(We shall refer to Form 8857 that petitioner filed with respondent as petitiondr's Form 8857.)

Petitioner attached the following statement tio petitióner' s Form 8857 :

TO WHOM IT MAY CONCERN:

I am submitting t his form because I am qualified in every way for equitable relief.

I and property I estate.

my spouse have no community property. What do havelis an inhéritance from my parent's My, husband runs his own business and is self- employed. business dealings, tions. Fuéther, his busindss dAalings.

I myself have no knowledge whatsoever of his in particular his stock transac- I have never been involved in any of .

The only reason I signed the joint tax return in thought it the first place was because his accountant would be more convenient for him to file a joint re-. turn.

On September 10, 1999, in response to petitioner' s. Form 8857, responde t's Joint Compliance Branch sent petitioner a letter (respondent' s -September 10, 1999 letter to petitioner) .

That lett-er stated in pertinent part:

'Thank pou for your. request for Relief from Joint and Several Liability (Form 8857) received March 26, 1999.

[X] Please complete the enclosed Form 886-A, Relief from Joint and Several Liability Questionnaire. ¹ The additional days from the date òf this lettier.

informatión should be returned within If you have any questions, you may write to us at the the above listed address shown above, or you may call .

umber. Tlïis is not a toll-free number.

Thank you for your cooperation.

¹The record does not contain a copy of from Joint and Several Liability Questionnaire" tionnaire) letter to petiitioner referred.

to which respondent's September 10, 1999 (ques the "Relief Petitioner did not returh a completed questionnaire to respon- dent, nor did she otherwise respoùd to respondent's September 10, 1999 letter to petit-ioner.

On September 10, 1999, espondent's Joint Compliance Branch Átlso sent Mr. Mellen a letter (respondent's September 10, 1995 letter to Mr. Mellen) .

That letter stated in pertinent part:

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ho filed a This is to inform you that Carolyn Mellen, joint- return with you for the tax year (s) shown above, has requested relief fèom joint and several liábility under section 6015 * * * . If we grant the requested relief, you alone will.be That the IRS may only collect th solely liable for all or a portion of the tax liabil- ity. from you. pays the balance owed, jou may %ant · to participate in the IRS proceedings by providing any .of the following information by October 15, 1999.

is, To insure the propshdëtermination of who alance due 1. Whether Carolyn Mellen knew or had dea- sons to know of the audit adjustments and/or the balance due on the inciome tax return(s) when he/she -signed the return (s) .

for hhe above tax period(s) 2.

The current marital status between you and Carolyn Mellen * * * 3. Whether Carolyn Melleñ significantly benefited from t-he unpaid liability.

4.

Why it would be fairAor unfair to hold Carolyn Mellen liable for the tax lia- bility.

Please provide specific details and appropriate docu- mentat-ion that support- your information.

* * * Mr. Mellen did not respond to the foregoing letter.

On October 29, 1999, .respondent's Joint Compliance Branch sent petitioner another letter (respondent's October 29, 1999 letter) .

That .letter stated in pertinent ,part:

SAlthough Mr. Mellen did notaespond to respondent's Septem- in a .letter dated Dec. 19, ber 10, 1999 letter to Mr. Mellen, 1999, entitled "TRANSFER TO APPEALS REQUEST", Mr. Mellen re- quested that the exaíninâtion of ferred to an IRS Appeals officer (Appeals officer) .

the 1994 joint return be trans- ® We have determined that:

[X] You are not entitled to relief from the under- statement of tax liability as an iniibbent Spoüse.

[X] Explanation for why relief was not granted:

t he You have not provided any informatioh Éo show ¿hat exam issues were and that you did not know or have any reason to know of the basis for the understatemerit of If you want to appeal our decisio statement why you disagree with our deciision. provided space at the end of this letter for you tcr provide your statement of disagreement is not adequate, you "may attach a seharate statement with a copy of this letter.

you must pÈovide a We hive If that space * * * O On November 5, 1999, petitioner returned to respondent respondent's October 29, 1999 letter and indicated in thé space provided in that letter for petitioner' s statement of disagree- ment (petitioner's statement of disagreement) that she disagreed with respondent's determination that she was not entitled to relief under section 6015.

In support of her disagre ment, O petitioner asserted in pertinent part:

[sic] I have NO I can provide a copy of my As I notified you previously, I, Carolyn Mellen, disagree with the above IRS deciàion because: knowledge of my husband' s stock purchases or capital gains for the 1995. W-2 form for that year, which I'm sure.you probably That was the total amount of my earn- already have. ings. gains. capital gains concerns and not my measly income. not know what papers I was to provide for this investi- gation.* I submitted everything I was asked to provide. tax attorney to review my situation.

I believe the audit was a result of stock & I from any stock or capital I'm sure, if necessarp, I had no benefit To my knowledge, I can get a o Any further inquiries can be made by calling me at 325- 5774 (801) .

*Was a letter sŠnt asking for specific info? If so, I did not récéive it.

¹The following handwritten notation appeared in .the margih of petitioner' s stätemënt oÈ disagreement near the telephone number tlíat petitioner provided therein "Disconnected callèd 11/9/00". does not disclose who made that notation. phone number at .which petitioner indicate "Any further inciuiries can be made by calling" was petitioner's office telephone number .at Qtiestar.

The record> The tele- * On February 14, 2000, respondent sent petitioner and Mr.

Mellen a notice of intent to levy with respect to taxable year 1995 On March 24, 2000, 1n .response to that notice, petitioner sent respondent a letter.

That letter stated in pertinent part:

I have filed for InnocenÈ Spous Relief for tl is par- ticular year and was told that since a. decision is still pending and is in Appeals Court should be taken against me or my property.

[sic] , no action My husband was ill. advisêd as to .how to file taxes for the year 1995. turn, and⁴ I would not ,have to appeal this matter. have a W-2 that specifically shows what money I earned för 1995. capital Óains.

He should not have filed a joint re- I I ,in no way had anything to do with his On November 14, 2000, an Appeals officer met with petitioner (November 14, 2000 .hearing) for at least 30 minutes and no more than one hour.

The purpose of that hearing was to discuss petitioner's request for equitable relief under section 6015(f).

At the November 14, 2000 hearing, the Appeals officer questioned petitioner, and petitiòner had the opportunity to present ìnfor- mation including documentation, with'respect to her claim for equitable relief under section 6015(f). Although petitioner knew prior to the~ November 14, 2000 hearing that the Appeals officer wanted to discuss with her the reasons why she believed that she wa.s entitled to equitable relief under section 6015(f), peti- tiener did not bring with her to that hearing any documentation supporting her position that she was entitled to such relief.

The Appeals officer considered all of the information that petitioner shared with him during the November 14, 2000 hearing.· As reflected in respondent's administrative record pertaining to petitioner (respondent's administrative record) which the Appeals officer created and/or on which he relied in arriving at his determination that petitioner was not entitled to equitable relief under section 6015(f), petitioner informed the,Appeals officer at that hearing that as of the date of that hearing:

(1) She was "still married to her husband, Craig Mellen, with whom she filed the joint 1995 Form 1040"; (2) she "signed the 1995 Form 1040 because her husband told her that that is what the accountant wanted" but had "never met the accountant"; (3) she "prepared her own income tax returns when she filed income tax returns separately from her husband" and "did not use a paid return preparer for completing or filing these income tax re- turns"; (4) she "has been working for eleven years"; (5) she "and her husband support the household"; (6) "her husband pays the mortgage payments to their home with his disability income"; (7) ."her salary was about $2,700 a month n November. of 2000"; (8) "she Îlas a married daughter that 1 elps out wìth the family expenses by contributing a couple hundred dollars a month" ; (9) "her husband has had two major accidents, which have left his legs unusable" ; (10) her husband is at working, and * * * receives less than $900 ä month in disability income"; (11) "her husband wäs an inventor in 1995"; (12) "her husband changed careers from the roofing industry to the invention industry in about 1990"; (13) "she häs lived in her present house since about 1987"; (14) "her hoùse is worth about $300,000"; ( 5) "as of November~ of 1995, she and her husband owed appròximately $15, 000 on the Énly mortgage ori the house" and "she had a 15-year mort- gage, and * * * it would be paid of f in a couple of years" ; (16) "her ass ts are in a trust " ; (17) she eally did not own anything othdr thari the house" ; (18) "she ' has not considered refihancing her house to pay off the tax liability"; (19) "the income she and her husband reported on their 1995 Form 1040 was largely lost in the stock market, but that she used some of it to pay for a wedding"; (20) she pays taxes on her own wages, but * * * she does not feel she should.pay her husband's taxes"; and (21) "her husband blames éveryone else for his problems" .

On November 17, 2000, the Appeals officer Ánd Mr. Mellen spoke over the telephone with *respect to, inte alia, peti- tioner's request for equitable relief under section 6015(f)."

As reflected in respondent's administrative record, the Appeals officer summarized in pertinent part as follows his conclusions with respect to petitioner's claim,for equitable relief under section 6015(f) in a document dated February 1, 2001, and entitled "Brief Narrative for Appeals Case Memo":

The casualty actually The basis for the additional assessment was the casu- alty loss claimed in 1995. happened, and should have been claimed, Mellen was at work in his warehouse when it blew up. He was injured, and he lost a lot of his property. Carolyn Mellen knew about husband get the casualty loss was not claimed in 1994. However, there was no tax liability in 1994.

the accident, and helped her No reason was given as to why through it.

in 1994. Craig There are two tiers of conditions that must be met to grant Carolyn meets the seven conditions under tier one (also referred to as general requirements).

innocent spouse relief under section 6015(f).

A problem does exist, however, under tier 2 (also known as local factors).

in meeting the factors O There appear to be no factors weighing in favor of equitable relief for the requesting spouse.

The following facts weighing against equitable relief are considered:

1.

They still live in the same house, and The requesting spouse is still married to the taxpayer. there is no indication of an imminent divorce. The requesting spouse works, and her husband col- lects disability income. are shared with the income available.

The household expenses "On at least one occasion after Nov. 17, 2000, the Appeals officer and Mr. Mellen discussed over the telephone Mr. Mellen's claims and/or concerns with respect to the 1994 joint return.

2.

• The requesta.ng' spouse new Knowledge' of the event. [sic] of thë accident that her husband was in- volvecÚ in prior änd subseqtlehr years, she filled outi her own . tax retiurns in order to file separately appears to have the Èùcíwledge of can be claimed.

She also kn w when it happened.Úh hen a deduction She 3.

Lack of economic hardship.

The requesting spouse the Sérvice [sic] as indicated that is in the process of gàrnishing her wacjes and that will leave thenÜin aMositiofi where they cannoti pay the tiaxpayer. also indicated their bills. HoweŸer that théy aré living in a $300, 000 home which will be païd off in a cou le of years have not considered refinancing the home to pay the tax.

The taxpáyers .

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The additional liability is not solely du non-requesting spoÜáe. tSok place in the nonirequestilng spouseQ work² environmênthtihe requesting'spouse had be efit of the results cif that work joint r turn khowbig thát She elected to file the the tax would be lower.

Even though the castialty to the In conclusion, Carolyn meets the threshold requirements for eciùitable rèlief . factors for eqùitable relief that a e in her favor is recommended that Carolyn not be granted i nocent spouse rélief for 1995 under Section 6015.(f) She doës not have ahy of the It On FebÈuhry 14, 2001, the IR A peals Offi.ce .sent p titioner a determination letter reciarding petitiòner claim ûnd r section 6015 (f) with respect tio táxable year 1995 That letter stated in pertinent part :

We're writing to t ell yo about yòuFNovember 5, 1999 request relief under Sectiión 6015 (f) of the Internal Revenue nade a decision for in13ocent spouse that he' We've debermined that, for the above tax year(s), we:

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cannot allow your request.

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You had knowledge of the casualty loss and. when i.t t ook place. Your 1995 retuhn was examined by the Internal Revenue Service, and you agreed to moving the loss from 1995 to 1994.

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The schedule below shows any adjustments we've made to your ac count .

Tax Period (s). * * * 1995 Amount of relief Amount of relie we could allów $0.00 youdrequested 1}$È0,205.00 Amount of tax remaining ¹ $10,205.

O O nco e amount sh wn is t-he total. of the F deral he penalty of $486 that- of 49 9 and respondent had assessed with respect taxable year 1995.

to pet-itioner's Petitioner and Mr. Mellen, both of whom were about 60 years old at the time of the trial in this ca e, own the res dence in which they haVe been living since 1987.

(For convenience, we refer to the real propertiy owned by petitioner and Mr . Mellen at which they have been living since 198 as petitioner s residence.) During the eriod from at least March 1999 until ometime uring 2001, Jamie and her daughter Jessica were living in petitioner' s residënce. During at least November 2000, Rick, Andrew, and Jamie's "significant other" Glen also we e iving in pehitioner' s residence.

Sometime during 2001, Jamie, Jessica, nd Glen moved out of petit-ioner's residence.¹¹ petitioner advis d the Appeals officer durincf th N vember 14, 200Ó hea ing that her daught(ér Jamie elped "out ith the family expensei by con⁶ ibuting couple liundrëd 11ars a mont-h" wliile Jamie and her daughter Messicaf inter alia? were ring in pet-Stioner7s payments ceased esidence, thos ( continued. .

ometime . ) .

_ 20 - Mr. Mellen was the general contractor for, and oversaw, the ccnsËruction of pet itioner' res i.dence during the 1980s. Al- tl ough petitiöner ñd Mr Mellen have been liviñg n that resi- dence since 1987, as of the -time of the trial in this case, certain work on petitioner's residence remained tinfinished, including completing the installation of güttiers, certain stuccowork, certain cement- work, certain sheetrock work in the garage, and certain landscapir3g in the backyard.

The unfinished sheetro¿:k üôrk in the garage of petitibner' s residence has prevented petitioner and Mr. Mellen from obtaining a certificate of occupancy for that residence. Without sui:h a certificate=of occupancy, the local autho ities will not approve petitioner' s residence for pèrmanent, as opposed to témporary, power.

t Since at least March 1999, petitioner and Mr.

Mellen have had certain maintenance problems with petitioner' s residence, including cert-ain cracked ceramic tiles, certairf 1 eaky plumbing,¹² wood rot in. certain wiñdows, certain flooding and ® mildew problems in the basement, and a missing*piece of flashing from tl e roof .

As of the time of t-he trial in this case, Mr.

Mellen liad fixed the leaky plymbing in pet-itioner' s residence, ¹¹ ( .

. cohtibued) during 2001 when Jamie, Jes ica, and tioñer's residence.

Glen moved out of peti- ¹²Thè leaky plumbing in quesEion caused certain sheetroc to rot.

but neithe petitiorier nor Mr. Mellen had repaired any of the otiter maintenance problems in that residence.

Petitioner' s residence does not contain any item of personal pröperty valued in excess of $800.¹³ Petitioner does not own any sterlihg silverware, furs, coin collections, o a wedding ing.

For purposes of 2000 eal property taxes, Salt .Lake County, Uthth (Salt Lake County) , determined that the total market value of petitioner's residence consisting. of the house and the land on which that house was ocated was $317,900.¹4 For purposes of 2001 real .prop rty taxes, Salt Lake County .determined that the tŠtal market v lue of petitioner' s residence consisting of the hcuse and. the land on which that house was located. was $310,100.¹ At the time of the trial'in the instant case, petitioner and Mr. Mellen owned petitioner's résidence free and clear of any O edcumbrances.

As of that time, petitioner had not att empted to obtain a loan secured by petitioner s residence in order to pay ¹³The only new piece of furnitu e in petitioner s residence was~ a couch that one of petitioner's sons purchased ¹'Salt Lake County determined that, for purposes of 2000 r al property tiaxes, . acres of $ 4,200, residence was $2, 866.23.

land on which t-hat house was lòcated were $263, 700 and respectively,e and the real propehty t ax on petit ioner's the market values of the house and t he Salt Lake. County det ermined that, for purposes f 2001 real property taxes, acres of $54,200, the marketNalues of the house and the .44 land on hich tihat hoúse was located were $255, 900 and respectively petitioner's .unpaid liability fór 1995.

22 - Petitioner and Mr. Mellen owned free and clea c5f any encumbrances a 1991 Infiriiti autòmobile, a 1988 Toyota t uck,¹ and another ruck that needed repair. At the time of the trial in this case, pe itioner was driving hér son's car because the 1991 Infiniti that she usiiallŸ drove needed repair.

In addition to petitioner's unpdid liability for 1995, at the ime of trial in the instant c ase, the debts of petitioner and/oFMr. Mellen were:

(i) $14,000 to tl e State of Utah.for State incóme ta c with re e t to th taxable year 1995, (2) a $545 judgment for a med cal bill (3) a debt in h undisölosed amount for ino ey. borrowed at an undiscl sed time from the Quéstar retirement plan, and (4) $9, 000 to the Questar retirement plan for a seàond loan that pet itione used sometime after the Novem- ber 14, 2doo heariris with the Appeals officer but before tlie date of the t iaI in this case in order to make tl e final balloon payment ith respect to th mo t c age on petitioner's residenòe.¹ ¹ A neighbor gave the 1988 Toyota truck to Mr. Mellen at a time not disclosed by the record 1 ecause it was not working, and the néighbor thought repairs necessary for that bruck tci become fun tiohal t hit Mr MMellerCniight be able to make the As of at least January 2002, .petitioner had been unable to obtain another loan from the Questar rétirement plan. least that time, because, since at standing loahs perinitted under the Qùestar YeÈiremeht plan at any brie time was two (i.e. loan) .

the maximum number of out loan ancÏ one residential one general That is .

OPINION

We review re spondent's denial of relief under section 6015 (f) ifor abuse of discr tibn.¹ Butler v. Commissioner, 114 T.C. 276, 292 (20 00) . Petitioner bears the burden of proving that respondent abused respondent's discretion in denying her relief under section 6015 (f) .¹ See Jonson v. Commissioner, 118 T.C. 106, 125 (2002) .

Section 6015 ( f ) provides :

SEC. 6015.

Ñ.ELIEF FROM JOINT AND SEVERAL LIABILITY ON JOINT RETURN.

(f) Equitable Relief.--Under procedures prescribed by the Secretary, if - - .

t taking into account all the facts and (1) circumstances, vidual (or any portion of either) ; and it is inequitable to hold the indi liable for any unpaid tax~or any, deficiency (2) relief is not available to such individ- ual under subsection (b) or (c) , the Secretary may relieve such individual of such 1 ability.

¹8In so holding, we reject petitioner's contention in her opéning brief , which sh appears to abandon in her answering brief c that. "the Commissioner' s determination * *- * is entitled to a presumption of correctness" . 1!14· T.C. 276, 292 (2000).

See Butler v. Commissioner, ¹SIn so holding, we reject petitioner's contention that sec.

491(a) shifts the burden of proof to respondent ase. ny event See Jonson v. Commissioner, 118 T.C. 106, 125 (2002) .

the ïecord establishes that respondent's examination in the instant In of the 1995 joint return commenced in 1997. See sec. 7491(a) ; Int rnal Revehue Service Restructuring and Reform Act of 1998 Pub. L. 105-206, sec. 3001(c), 112 Stat. 727.

t In the instant case, the parties asree that relief is not available to petitioner under section 6015 (b) or (c) , thereby satisfying section 6015 (f) (2) 2° We turn first to a dispute between the parties as to the scope of the record upon which we should determine whether respondent4abused respondent's discretion in denying petitioner relief under section 6015(f).

As we understand her position, petitioner contends that that record should include not only the information that petitioner presented to respondenty during respondent's administrative consideration of petitioner's request for relief under section 6015 (f) but also the additional informa- tion (petitioner's additional information) that petitioner presented at trial and that is part of the record in this case.

Respondent counters that the Court should determine whether respondent abused respondent's discretion in denying petitioner relief under section 6015(f) only on the basis of the information that petitioner presented to respondent during respondent's administrative consideration of her request for that relief .22 .

2°The Court's jurisdiction in this case is dependent upon sec. 6015(e)(1). 497 (2002) , Fernandez v. Commissioner, 114" T C. 324, 330-331 (2000) ; Butler v. Commissioner, supra at 289-290.

See Ewilig v. Commissioner, 118 T.C. 494, 496- 2¹In this connectioÉl, respÃndènt objected at trial, inter. alia, to certain evidence as irrelevant and immaterial to the issue of whether respondent abused espondent's discretion in denying petitioner equitable relief under sec. 6015 (f) . We overruled respondent's ob-Íections and indicated that, , in deter- ( cont inued. .

.

We need not resolve the forégoir g disput-e between the partieI.

That is because, based upön our examinationWf the ntire record in this case, including pet itioner' s additional information tha id part of the record established at trial, we find that pet i- tioner has faìled to carry her burden of showi g that respondent abused. respondent s discretion in denying her reliéf under section 6015 (f) with respect to taxable year 1995.22 We initially addyess certain of the arguments t hat peti-- tioner advances on brief, all of which we find.to be withbut merit.

To illustrate, petitioner argues on brief that favor of the spouse . [petitioner] does not a ruling i mean the tax debt .is forgiven or that it will neve paid and circumstanc es, requesting spouse [pet itioner] full at It only means that based upon 3the present is not eqùitablë to compèl * * * If än económic hardship is to pay t-he tax debt this tiiñe.

be facts the it in .

resenhthen CongresÉ ha declared that t he present collection éf the thx .s t-o bè suspended as to the ¹ ( .

.

. continued) ning whether respondent abused respondent s discretion in enying that relief, we would give wlïatever wèight we consider dppropriate to the evidence to which respondent objected.

22In so holding, we have . considered petit ioner' s contention t hat respondent did not fulfill what petitioner claims respondent's responsibility to investigate and äscettai during the administrative consideration of petitioner' s request for relief uhder sec res eat 6Ól5(f). RegÀrÈlless of whether or not petitioner's cont-ent-ion has ahy merit, pétitioner had the opportunit y at- trial to intro duce admìssible epidencé into the record that establïshed all of he fac ts which she claiins respondent· Chad a duty tïo invest icjate tc pétit-ionér's claim for equitablenelief under seci.

6015 (f) all of t he facts and circumstances wit-h as and ascert-airr and on which she relies in order to show t·hat respondent aliused respondent's discretion in denyinc} her rélief under sec. 6015 (f) .

reque ting dpouse [petitioner] .

26 - We rèject petït iciier' s views regãrdihg tihe nature of the relief from joint- and several liability provided by section 6015.

Relief undÃr that sect-ion from jbint and several liability is not, as petitioner alleges, the temporar r suspension of such liability.

See sec. 6015.

By way of further illustration, petitioner argues on brief that Revenue Procedure 2000-15, 2000-1 C.B. 447 (Revenue Proce- dure 2000 15) , which prescribes procedures that are to be used in determining whether an individual qualifies for relief under section 6015 (f) , "is fundamentally flawed in that it unduly limits the broad application of the stÃtute seeking to provide tax collection relief to a spouse" añd considers facts and/or .

circumstances that are "legally irrelevant" and inappropriate in this case. We reject those arguments about Revenue Procedùre 2000-15.

As directed by section 6015 (f) , respondent has prescribed procedures in Revenue Procedure 2000-15 t hat are Èo be used in determining whether an individual qualifies for relief under that section. Section 4.01 of Revenue:Procedure 2000-15 lists seven conditions (threshold conditions) which must be satfisfied before the IRS will consider a request for relief under section 6015 (f) .

Respondent concedes that those threshold conditions are -satisfied in the instant case. Where, as here, the requesting spouse sátisf ies the thkeshold condit ións , section 4 . 01- of Revenue Procedure 2000=15 provides that -a requesting spouse .may be re ieved under section 6015 (f) of all or pa t of the liability in ques ion if, taking into account. all of the facts .and circum- tances) the IRS determines that it would be inequi.tablesto hold the requesting spouse liable for sucli liability.

here, Ás libre, the requesting spouse satisfies the tlíresh O old conditions set forth in section 4 . 01 of Revenue Procedure 2000 15, deórion 4.02 of that evenue procedure sets forth the I · circums tance , insany case where a liability reported in a -joint return is unpaid, unddr· which the 'IRS ordinarily will grant relief to that spouse under section 6015 (f) .

In the instant cáse, the liability from which relief is sought arises from a deficiency. Theeefore, section 4.02 of Revenue Procedure 2000-15 is not .applicable here.²³ Howeverj where, as here, the request- ing spouse fails to qualify for relief under section 4.02 of that r venue procedure, the IRS may nonetheless grant the requesting s oude relief under section 4 . O 3 of Revehue Procedure 2000-15.

That section provides a partial list of positive and negative factors which respondent is to take into account in. considering 23Assuming arguendo that sec. 4.02, Rev. Proc. 2000-15, 2000 1 C.B. 448, we e applicable in the instant case petitioner whuld not· qualify for relief under that section of that revenue p oceduÈe. the circumstances set forth in sec. 4.02 öf Revenue Procedure in the instant case. 2000-15 are present is becauÀe petitioner has failed to show that hat .

whether respondent will grant a individual full or pårtial S equit-able relief under section 6015 (f) .

As Revenue Procedure 28 - 2000-15 mäkes clear, no single factor is to be determinative in any particular case, all fact·órs are to be considered and weighed appropriatiely, and the list of factors is not intended'to.be exhaüstive Rev. Proc. 2000 15, sec. 4.03, 200

1 C.B. 447, 448.

We no tùrn to the applicatsion of section 4..03 of Revenue Procedu e 2000 15 to th record est-ablished in the instant case.

As pertinent here, section 4.03 (1) of Revenue Procedure 2000-15 sets forth.the following positive factors which w igh in favor of granting relief under section 6015 (f) :

(a) Marital status.

The requesting spoùse, is * * * divorced from the nonrequesting spouse.

(b) Economic hardship.

The requestincj spouse would suffer economic hardship (within the meaning of section 4.02 (1) (c) of this revenue procedure) from the liability is not granted.

if relief .

(c) Abuse.

The requesting spouse was abused by the nonrequesting spouse, but such abuse did not amount to duress (dkNo knowledcfe or reason t o know.

case of a liability that arose from a deficiency, requesting spouse did not know and had no reason to know of the items giving rise to the deficiency.

* * * In the the (e) Nonrequesting spouse' s legal obliqAtion. nonrequesting spouse has a legal obligation pursuant to a divorce decree or agreement liability. This will. not be a fäctor weighing in favor of relief if the requesting spouse knew or had reason to know, at was entered into, Éhat nöt pay the liability.

the time the divorce decree ór agreement t-1 e nönrequest ing spouse would to pay the out-standing .

The (f) Attributable to nonrequesting spouse.

The liability for which relief is sought utable to the nonrequesting spouse.

is solely attrib- (We sh tll herein fter refer to the pos tiire factors set forth in section 4 . 03 (1) (a) , (b) (c) , (d) , (e) , and (f) of Revenue Procedure 2000-15 as the marital status positive factor, the economic hdrdshih posit-ive factor, the abuse posit-iv$ faótor, the knowledge or reason to know positive factor, the legÁl obligation pcsitive factor and the attributión positive factor, respec- tively . ) With respect to the marital status positive factor- set forth in sectioñ 4.03 (1) (a) of Rëvenúe Procedurs .2000 15, pet itioner concedes that the marital status positive facto is not preseñt in this case.

, Wi t resp ct to t-h economic hardshi posit ive fact or set forth in se tion 4 03 (1) (b) of Rev nue Procedure 200 - 5 2 24In determining whether a request1ng spouse wrll suffer eáoñomic hardship, sec. to which sec. 4.03(1) (b) of that revenue procedure refers, requires reliance on rules similar to those provided in sec 02 (1) (à) of Revenuedròcedu e 2000-15, . 301.6343-1(b) (4), Proced. & Admin. Regs Sec. 301.6343 & Admin. Regs. , generally provides that- an 1(b) (4) (i) , Proced. individual suffers an economic hardship if t-he individual unable to pay his or her reasonable basic living expenses. 301.6343-1(b) (4) part:

Sec. & Admin. Regs., provides in pertinent Proced is (ii) Information from taxpayer.

In determining a reasonable amouñt for basic. living expenses the direc- tor will conside Any inforinatfion provided by the taxpayer including-- .

( continued. .

. ) petitioner contends that that positive factór is present in thi -- 30 case.

Petitioner hás established that as of the time of the trial in this case she and/or Mr⁷ Mellen was liàble for a $545 júdgment for a medical bill. , She has also shown thati as of March 2002, Questar was deducting the following approximate amounts each month from her compensation:

(1) $140 for Federal income tax, (2) $113 for-State income tax, (3) $186 for Social Security tax, (4) $43 for Medicare tax, (5) $96 for health benefits, (6) $30 24 ( .

. cont inued) (A) The taxpayer' s age, edployment sbatus and history, ability to earn, number of dependents, and status as a dependehr öf someone else (B) The amount r asónably necessary for food, tax payments (including féderal, clothing, housing (inóluding utilities, home-owner insurance, hom owner dues and the like) , medical expenses (including heälth insurance) , currént local) , alimony, child support, or other court-ordered payments,Mnd expenses nécessÃry to the taxpayer' s production of incomé (such as dues for a trade9uniori or professiorial orgÃnization, or child cÃre payments which allows the taxpayer to be ainfully eniployed) ; transportation, .state, and (C) The c st o living in the geogÉaphic area in which the taxpayer resides; (D) The afnount of property exempt from levy hich is ava11able to pay the taxpayer' s e:icpenses; .

(E). Any special education natural disaster; extraordinary circums ances such as expenses, a niedical catastirophe, or and (F) Any othe factor that the taxpayer claims bears on economic hardship .and brings to the attention of the director.

.

for dental benefits, (7) $60 for reserved parking, (8) $52 for life insurance, (9) $5 for accident insurance, (10) $300 for a $14,000 debt owed to the State of Utah for State income tax with respect to taxable year 1995, (11) $17 for a legal service plan, (12) $168 on a loan from the Questar retirement plan, (13) $173 on a second loan from the Questar retirement plan, (14) $77 for a "Micro Computer 1" (the meaning of "Micro Computer 1" is not disclosed by the record), (15) $191 as a contribution to the Questar retirement plan, and (16) $8 for savings bonds. Further- more, petitioner has shown that at least as -of the time of the trial in this case, she was investing $50 a month in a mutual fund and had a balance in that mutual fund of $500. However, on the record before us, we find that petitioner has failed to establish the amounts of any other expenditures, let alone expenses that section 301.6343-1(b)(4), Proced. & Admin. Regs., indicates are to be considered in determining a reasonable amount for basic living expenses.²⁵ We further find on the record 2sIn an effort to establish certain expenses that sec.

indicates are to be The documentary evidence that petitioner proffered 301.6343-1(b)(4), Proced. & Admin. Regs., considered in determining a reasonable amount for basic living expenses, petitioner proffered at trial certain documentary evidence. consisted of nothing more than petitioner's self-serving summa- ries of expenses that she claims to have incurred. Respondent objected to the admission of that evidence pursuant to Fed. Rules of Evid. 802 and 1006. We sustained respondent's objections. Petitioner did not substantiate by reliable documentary evidence most of that petitioner substantiated any such expenses by reliable the expenses claimed in such summaries.

To the extent (continued...)

32 - before us that petitioner has failed to persuáde us that she would not be able to pay a reasonable amount for basic living expenses if she remained jointly and severally liable for peti- tioner' s unpaid liability for 1995.26 The record before us establishes that petitioner, inter alia:

(1) Has been employed 25 ( .

.

. continued) documentáry evidence, we have found that ,she established such expenses 26In attempting to persuade us that she would not be able to pay a reasonable amount for basic living expenses if she were not granted relief under sec. 6015(f), petitioner advances various contentions, all of -which we find to be without merit. illustrate, petitioner. appears .to contend that the $545 judgment obtained for an unpaid medical. bill, which judgment remained unsatisfied as of the time of has been unable to pay a reasonable amount for basic living expenses. However, petitioner testified that medical bill with i-espect· to which the $545 judgment was obtained "has been paid of f . " Petitioner apparently disputes in question and therefore has the validity of the $545 judgment On the record before us, we find that peti- refused to pay it. tioner' s testimony does not establish that petitioner has been unable to pay the $545 judgment the trial herein, shows that she the underlying in question.

in question To By way of further illustration, petitioner contends on brief that petitioner' s "telephones had been disconnected for three the implication being that petitioner was not able (3).months", to afford to pay her telephone bill. To support her contention regarding her inability to pay her telephone bill for 3 months, petitiorier relies on the notation "Disconnected called 11/9/00" that appeared in the margin of petitioner' s statement of dis- agreement with respect to respoñdent's October 29, 1999 letter .6015 (f) . stating that she was not entitled to relief únder sec. We reject the inference that petitioner attempts to draw from that notation. petitioner'Á statementh of disagreement was petitioner's telephone number at Questar, and not her home telephone number. Further- more, petitioner' s conten ion that "telephones had been discon- nected for three (3) months" the record.

The record establishes that the nuïnber shown in is not supported by any evidence in by Questar since 1989; (2) was earning, annual compensation of $38 160 at the time of~ the trial in this case; (3) c ntributed regularly each pay period to the Questar retirement plan; ( ) invested monthly in a mutual fund; (5) invested regularly each pay period in savings bonds; (6) has undisclosed assets in trust; and (7) has an inheritance from her "parent's estate".

• T e record also establishes (1) that at the time of the trial in tl is case Mr Mellen was receïving monthly SS disability benefits of $949 and was entitled as of April 1999 to hospital insurance uüder Medicare, (2) that petitioner.and Mr. Mellen ownebl peti- tioner's .residence and theiFautomobiles free and clear of any encumbrances, (3) t hat petitioner' s residence had an assessed market value of. $317,900 in 2000 and $310,100 in 2001, and ( ) that petitioner has not attempted to obtain a loan secured by petitioner's residence in order to pay petitioner's unpaid liability for 1995.

On the record before us, we find that petitioner has failed to carry her. burden of establishing that the economic hardship positive factor set forth in section 4.03 (1) (b) of ReYenue rocedure 2000-15 is present in tihe instant case.

With r spect to the abuse positive factor seti forth iú ection 4.03 (1) (c) of Rekrenue Procedure .2000-15, pet-itione ncedes that that positive factor is not preser t in the ins tant Wibh respect to thé knowledge or reason to know positive factor set forth ireséctiian 4.03(1) (d) of Revenue Procedure 2000- 15, petitiòner does not dispute that that positiive factor is not present in the instant 2case Instead, she arhues that that factor is "legallý irrelevanÈ" to determining whether she is ent-itled to eqûit-able relief uùder section 6015 (f) .

We disagrée.

We find that whetiher a spouse reqùesting relief uniler section 6015 (f) knew or had rea on to~know of the item giving rise to a deficiency is a releYant*facto in determining wfietìher suŠh spouse is entitled to such relief With respect tb the legal obligat-ion posihive factor set forth in section 4.03(1) (e) of Reverïue Proc dure 2000-15, on the record before us, we find t ils factoF to be a neut ral factor in the instant- case.

That is becaus at all reldvant t imes peti tioner and Mr. Mellen were married.

With respect to the attributioil positive factor set- forth in • section 4.03 (1) (f) of lievenùe Procedure 2000-15, petitioner contends that that positiÝe factor is prese t in this .case because "It was Craig Mellen's activities (i.e.

the fire and the subsequent explosion) thaFgenerated a casualty loss We agree .

with petitioner.

The claimed casualty loss deduction of $30, 930 in the 1995 joint return is the item that gave rise to the deficiency for 1995 (and the resulting unpaid liability for 1995) , and that claimed deduction was att ributable to the July , 1994 accident in which Mr. Mellen' s property was damaged or destéoyed.

On the .record before us, we find that petitioner has carried her burden of establishing that the attribution positive factor set.forth in section 4.03(1) (f) of Revenue Procedure 2000- 15 is present in the instant case.

Turning to the negative factors weighing against granting r lièf under s ction 6015 (f) set forth i i section 4.03 (2) of Revenue Procedure 2000-15, as pertinent here, those factors. are:

.(a) Attributable to the requesting spouse.

The unpaid liability or item giving rise to the deficiency is attributable to the,requesting spouse.

.

• (b) Knowledge, or reason to'know.

A requesting spouse knew or had reason to know of the item giving rise to a deficiency * * *. This is an extremely strong factor weighing against relief . when the factors in favor of equitable relief are unusually strong, under § 6015 (f) * * * in very limited situations where the requesting spouse knew or had reason to know of an item giving rise to a deficiency.

it may be appropriate to grant relief . Nonetheless, .

(c) Signifìcant benefit.

The requesting spouse has significantly benefitted (beyond normal support) from the unpaid liability or items giving rise to the deficiency.

* * * (d) Lack of economic hardship.

The requesting spouse will not experience economic hardship (within the meanincj of section 4.02 (1) (c) 'of this revenue procedure). if relief from the liability is not granted.

(e) Noncompliance with federal income tax laws.

The requesting spouse has not made a good faith effort to comply with federal following the tax year or years to which the request f9r relief relarés.

income tax laws in the tax.years (f) equestihg sdouse's legal obligation.

Tlie requesting spouse has a legal obligation pursuant to a O O 15, 1994 accidént in which Mr. Melleñ' property was damaged or destéoyed.

On the record before us, we find that -petitioner has carried her burden of establishing that the attribution positive fadtor set forth-in section 4.03(1) (f). of Revenue Procedure 2000- 15 is present in the instant case.

Turning to the negative factors weighing against- granting relief under section-6015 (f) set forth in section 4..03 (2) of Revenue Procedure 2000-15, as pertinent here, those factors)are:

(a) Attributable to the requesting spouse.

The unpaid liability or iteni giving ris to the deficiency is attributable to the.requesting s ouse.

(b) Knowledge, or reason to know., ,A requesting² spouse sknew or had reason to knów of the item giving rise to a deficiéhcy * * *. This is an extremely strong factor weighing against- relief . when the factors in4favor of3eï;[uitable relief are unusually strong, it may be appropriate to grant relief uhdér § 6015 (f) * * * in very limited situations where the requesting spoùse knew or had reasön to know of an item giving rise to a deficiency.

. Nonetheless, (c) Significant benefit._ The- requesting spouse has significantly benefitted (beyond normal support) from the unpaid liabilityvor items giving rise to the deficiency.

* * * (d) Lack of economic hardship.

The requesting spouse will not experience economic hardship (within the meaning of section 4.02 (1) (c) of this revenue procedure) if relief from the liability is not granted.

(e) Nonc mpliance with federal income tax laws.

The requesting spouse has not made adood faith effort to comply with federal following the tax year or years to which the request for relief relates.

income tax laws in the tax years ( f ) Requesting spòuse ' s legal obligation.

The requesting spotise has a legal obligation pursuant to a 15, 1994 accident in which Mr. Mellen's property was damaged or destroyed.

On the record before us, we find that petitioner has carried her burden of establishing that the attribution positive factor set forth in section 4.03(1)(f) of Revenue Procedure 2000- 15 is present in the instant case.

Turning to the negative factors weighing against granting relief under section 6015(f) set forth in section 4.03(2) of Revenue Procedure 2000-15, as pertinent here, those factors are:

(a) Attributable to the requesting spouse.

The unpaid liability or item giving rise to the deficiency is attributable to the requesting spouse.

A requesting the item giving (b) Knowledge, or reason to know.

spouse knew or had reason to know of rise to a deficiency * * *. This is an extremely strong factor weighing against relief.. Nonetheless, when the factors in favor of equitable relief are unusually strong, under § 6015(f) in very limited situations where the requesting spouse knew or had reason to know of an item giving rise to a deficiency.

it may be appropriate to grant relief * * * .

(c) Significant benefit.

The requesting spouse has significantly benefitted (beyond normal support) from the unpaid liability or items giving rise to the deficiency.

* * * (d) Lack of economic hardship.

The requesting spouse will not experience economic hardship (within the meaning of section 4.02(1)(c) of this revenue procedure) if relief from the liability is not granted.

(e) Noncompliance with federal income tax laws.

The requesting spouse has not made a good faith effort to comply with federal following the tax year or years to which the request for relief relates.

income tax laws in the tax years (f) Requesting spouse's legal obligation.

The requesting spouse has a legal obligation pursuant to a divorce decree or agreement to pay the liability.

(We shall hereinafter refer to the negative factors set forth in section 4.03(2)(a), (b)., (c), (d), (e), and (f) of.Revenue Procedure 2000-15 as the attributión negative factor, the knowl- edge or reason to know negative factor, the significant benefit negative factor, the economic hardship negative factor, the noncompliance negative factor, and the ~1egal obligation negative factor, respectively.)

The parties do not dispute that the knowledge or reason to know negative factor, the economic hardship negative factor, and the legal obligation negative factor set forth in section 4.03(2)(b), (d), and (f), respectively, of Revenue Procedure 2000-15 are the opposites of the knowledge or reason to know positive factor, the economic hardship positive factor, and the .

legal obligation positive factor set forth in section 4.03(1.) (d), (b), and (e), respectively, of that revenue procedure.

We also note that the parties do not dispute that the attribution nega- tive factor set forth in section 4.03(2) (a) of Revenue Procedure 2000-15 is essentially the opposite of the attribution positive factor set forth in section 4.03(1)(f) of that revenue procedure . 27 • 27Although we do not believe that those two factors are inter alia, exactly opposite because, factor does not contain the word "solely" that appears in the attribution positive factor, we conclude that respondent's use of (continued...)

the attribution negative With respect to the.attribution negative factor set forth in section 4.03(2)(a) of Revenue Procedure 2000-15,, we found above that petitioner carried her burden of establishing that the attribution positive factor set forth in.section 4.03(1)(f) of that revenue procedure is present in the instant case.

On the.

record before us, we further find that petitioner,has carried her burden of establishing that the attribution negative factor set forth in section 4.03(2)(a) of Revenue Procedure 2000-15 is not present in,the instant case.

With respect to the knowledge or reason to know negative factor set forth in section 4.03(2)(b) of Revenue Procedure 2000- 15,. we indicated above that petitioner does not dispute that the knowledge or reason to know positive.factor set forth in section 4.03(1)·(d) of that revenue procedure is not present in the instant case. Nor does petitioner.dispute that the knowledge or reason to know negative factor set forth in section 4.03(2)(b) of that revenue procedure is present in the instant case.

Instead, petitioner contends, as she does with respect to the knowledge or re son to know positive factor, that the knowledge or reason to know negative factor is "legally irrelevant" to resolving whether petitioner is entitled to relief under section 6015(f).

We found 27(...continued) the word "solely" in describing the·attribution positive factor but not affect our findings and conclusions with respect to those factors in" the instant case.

in describing the attribution negative factor does not above and restate here that whether a spouse requesting relief under section 6015(f) knew or had reason to know of the item giving rise to a deficiency is relevant in determining whether such spouse is entitled to such relief.

With respect to the significant benefit negative factor set forth in section 4.03(2)(c) of Revenue Procedure 2000-15 (i.e., whether the requesting spouse has significantly benefited beyond normal support from the unpaid liability or item giving rise to the deficiency), petitioner contends on brief that she did not significantly benefit from the item giving rise to the deficiency because it "did not significantly increase her wealth, her standard of living, or provide any meaningful benefit in excess of the support she is otherwise entitled to receive from her spouse under state law."

We find on the instant record that petitioner has failed to establish the amount that she and Mr. Mellen expended annually for their normal support during 1994, 1995 (the year to which the unpaid liability at issue relates), and thereafter. Nonetheless, it is reasonable to assume that the amount that they expended annually for such support during 1994 and 1997 through 2001 did not exceed their annual net income (i.e., the total of peti- tioner's net compensation from Questar, Mr. Mellen's disability benefits, and any interest, dividends, and other income disclosed by the record) for each such year (annual net income) .28 During the period 1994 and 1997 through 2001, the record establishes that the annual net income that petitioner and Mr. Mellen re- ceived ranged from approximately $17, 000 to $38, 500.

The claimed casualty loss deduction of $30, 930 gave rise to a deficiency of $9,719 for taxable year 1995.

By not paying that $9, 719 of Federal income tax, petitioner and Mr. Mellen had an additional $9, 719 of funds available to spend.

The deficiency of $9, 719 attributable to the casualty loss deduction that petl- tioner and Mr. Mellen claimed for taxable year 1995 ranged from approximately 25 percent to 57 percent of the annual net income of petitioner and Mr. Mellen during the period 1994 and 1997 through 2001.

We find that, by not paying the Federal income tax of $9,719 attributable to the claimed casualty loss deduction in question, petitioner and Mr. Mellen had funds available to them (i.e., $9,719) substantially in excess of their normal support, which we assume did not exceed their annual net income for each 28We have not made any such assumption regarding 1995 or to 1995 because peti- 1996. We have not done so with respect tiener testified that "the income she and her husband reported on their 1995 Form 1040 [i.e., petitioner's compensation from Questar of $22, 691, taxable interest of $35, dividend income of .

. $19,152, and Schedule D capital gain of $500,755] was largely lost in the stock market, but that she used some of it to pay for a wedding". We have not made any assumption with respect to 1996 about their normal support during that year. record is devoid of any financial tioner'and Mr. Mellen for that year.

the amount that petitioner and Mr. Mellen expended for information relating to pet1- is because the That of the years 1994 and 1997 through 2001.

On the record before us, we find that petitioner has failed to persuade us that she did not significantly benefit beyond normal support from the $9,719 of Federal income tax not paid for taxable year 1995.

On that record, we further find that peti- tioner has failed to carry her burden of establishing that the significant benefit negative factor set forth in section 4.03(2)(c) of Revenue Procedure 2000-15 is not present in the instant case.

With respect to the economic hardship negative factor set forth in section 4.03(2)(d) of Revenue Procedure 2000-15, we found above that petitioner failed to carry her burden of estab- lishing that the economic hardship positive factor set forth in section 4.03(1)(b) of that revenue procedure is present in the instant case.

On the record before us, we further find that petitioner has failed to carry her burden of establishing that the economic hardship negative factor set forth in section 4.03(2)(d) of Revenue Procedure 2000-15 is not present in the instant case.

With respect to the noncompliance negative factor set forth in section 4.03(2)(e) of Revenue Procedure 2000-15, petitioner contends that she "has filed all federal income tax returns required of her since she entered the work force after her graduation from high school" and that "She has paid all federal income tax liabilities that she owes, but for the single tax year in question."

The parties stipulated that "For tax years * * * 1996 through 2000, petitioner filed income tax returns". Respon- dent does not contend that petitioner did not pay any Federal income tax shown due in each such return. With respect to taxable year 2001, the record contains an unsigned Form 1040 for that year.²⁹ On the record before us, we find that petitioner has established that she has made a good faith effort to comply with the Federal income tax laws following taxable year 1995.

We further find on that record that petitioner has carried her burden of establishing that the noncompliance negative factor is not present in the instant case.

With respect to the legal obligation negative factor set forth in section 4.03(2)(f) of Revenue Procedure 2000-15, we found above that the legal obligation positive factor set forth in section 4.03(1)(e) of Revenue Procedure 2000-15 is a neutral factor in the instant case.

On the record before us, we further find that the legal obligation negative factor set forth in section 4.03(2)(f) of that revenue procedure is a neutral factor in the instant case.

On the record before us, we find that petitioner has failed to carry her burden of establishing any other factors with 29The record does not establish that petitioner had filed the unsigned Form 1040 for 2001 as of May 14, 2002, the trial in this case.

the date of respect to the year at issue that are not set forth in Revenue Procedure 2000-15 and that weigh in favor of granting her relief under section 6015(f).

Based upon our examination of the entire record before us, we find that petitioner has failed to carry her burden of showing that respondent abused respondent's discretion in denying her relief under section 6015(f) with respect to taxable year 1995.

We have considered all of the contentions and arguments of the parties that are not discussed herein, and we find them to be without merit, irrelevant, and/or moot.

To reflect the foregoing, Decision will be entered for respondent.

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