# UNITED STATES TAX COURT

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## Record

- **Collection:** Agency decision
- **Document type:** Agency decision

## Text

RS

T.C. Memo. 2016-141
UNITED STATES TAX COURT

PAMELA HARDIN, Petitioner, AND ROBERT H. LATTINVILLE, Intervenor v.
COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 648-14.

Filed July 26, 2016.

Harry Charles, for petitioner.

Ben W. Hobert and Jon A. Santangelo, for intervenor.
Karen O. Myrick, for respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION
CHIECHI, Judge: Respondent determined the following deficiencies in,
and accuracy-related penalties under section 6662(a)¹ on, petitioner's Federal
income tax (tax):

¹All section references are to the Internal Revenue Code in effect at all
relevant times. All Rule references are to the Tax Court Rules of Practice and
Procedure.

SERVED Jul 26 2016

-2[*2]

Year

Deficiency

Accuracy-Related
Penalty Under
Sec. 6662(a)

2009

$75,514.48

$14,813.24

2010

111,061.31

22,448.00

The issues remaining for decision are whether petitioner is entitled to relief
under section 6015(f) and whether the Court should impose a penalty on petitioner
under section 6673(a)(1) and sanction her attorney of record under section
6673(a)(2). The Court holds that petitioner is not entitled to relief under section
6015(f). The Court further holds that it will not at this time impose a penalty on

petitioner under section 6673(a)(1) or sanction her attorney of record under

section 6673(a)(2).
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
Pamela Hardin (petitioner) resided in Missouri at the time she filed the
petition.

At times not established by the record, petitioner was awarded an undergraduate degree in finance and international management and a master's degree in
business administration. At all relevant times, including during 2009 and 2010,

-3[*3] the taxable years at issue, petitioner was licensed as a certified financial
planner.

From a time not established by the record to September 2003, petitioner
worked in Missouri for Moneta Group, a registered investment advisor. At a time
not established by the record before 2003, one of petitioner's clients at Moneta
Group referred her to Robert Thoma (Mr. Thoma), whom she retained as her tax
return preparer. During the years in which petitioner retained Mr. Thoma, they

sometimes referred clients to one another.
Petitioner met Robert H. Lattinville (intervenor) in 1997. In 2002, she
began to date him seriously. They married on May 15, 2004, and were still

married during 2009 and 2010.
During 2009 and 2010, intervenor was a partner in the law firm of Stinson

Morrison Hecker, LLP. During those years, he also owned a sports management
business that he operated as a sole proprietorship. Intervenor discontinued his
sports management business in 2014.
Petitioner has two daughters from a previous marriage who, except while
they were attending college, resided with her and intervenor during 2009 and
2010. During those years, petitioner received from her former husband and the

-4[*4] father of those daughters monthly child support of $403.25 for them, who as
of January 1, 2009, were ages 20 and 18.
Petitioner and intervenor have one daughter from their marriage who was
seven years old as of November 16, 2011, and who also resided with them during

2009 and 2010.
At all relevant times, petitioner and intervenor generally maintained
separate bank accounts. During 2009 and 2010, petitioner maintained various
bank accounts, some of which were business bank accounts. During 2009 and
2010, petitioner and intervenor maintained a joint account into which intervenor

deposited between $7,000 and $7,500 each month. During those years, he also
paid directly certain household expenses, including expenses, as incurred, in
renovating the residence in which they lived.
Sometime in 2003, petitioner, who at the time had 20 years of experience in
the investment industry, created and became president of a financial planning
company known as Foundation Wealth Management, LLC (FWM). FWM is a
registered investment advisor that files reports with the Securities and Exchange
Commission and that petitioner has been operating as a sole proprietorship since
she created it. Intervenor was not involved in the creation or the operation of

-5[*5] FWM. Petitioner retained Mr. Thoma in fall 2003 to establish an accounting
system for FWM.
As president of FWM, petitioner was responsible for FWM's providing
comprehensive personal financial planning, which included giving advice on
matters involving cashflow, retirement, tax and estate planning, and investment
management. Between 2005 and 2012, the average value of the assets that petitioner managed as president of FWM increased from $78 million to $150 million.
In 2014, the average value of the assets that she managed as president of FWM
was $232.3 million. As of November 2011, petitioner had averaged a client
retention rate throughout the previous eight years of 99 percent.
During the period 2009 through 2014, petitioner retained Shaundra Huebner

(Ms. Huebner) to assist her in operating FWM. Ms. Huebner assisted petitioner in
various ways, including in maintaining books and records for FWM's business
operations. Ms. Huebner also gathered certain personal information and information relating to FWM for use in the preparation of petitioner's tax return for, inter

alia, each of the taxable years 2009 and 2010. Ms. Huebner gave the information
that she had gathered for use in preparing each of those returns to Mr. Thoma.
Petitioner maintained several separate bank accounts for FWM (FWM's
bank accounts). Petitioner was the authorized signatory over, and received the

-6[*6] bank statements for, FWM's bank accounts. Intervenor did not have signatory authority over, and did not receive the bank statements for, FWM's bank
accounts. Nor did he receive any other financial information relating to FWM.
Petitioner and intervenor filed jointly Forms 1040, U.S. Individual Income

Tax Return (return), for the taxable years 2009 (2009 joint return) and 2010 (2010
joint return). (The Court shall sometimes refer collectively to the 2009 joint return
and the 2010 joint return as the joint returns in question.)

Petitioner and intervenor retained Mr. Thoma to prepare the joint returns in
question. While he was preparing each of those returns, Mr. Thoma met on one
occasion with both petitioner and intervenor and met on other occasions separately
with petitioner and with intervenor. Petitioner, or Ms. Huebner on her behalf, provided Mr. Thoma with information relating to FWM for use in his preparation of
Schedule C, Profit or Loss From Business (Schedule C), for that business for each

of the taxable years 2009 (2009 FWM Schedule C) and 2010 (2010 FWM Schedule C). Intervenor provided Mr. Thoma with information relating to his interest in
the law firm in which he was a partner for use in his preparation of Schedule C for
that partnership interest for each of the taxable years 2009 (2009 law firm Schedule C) and 2010 (2010 law firm Schedule C). Intervenor also gave Mr. Thoma
information relating to intervenor's sports management business for use in his

-7[*7] preparation of Schedule C for that business for each of the taxable years 2009

and 2010.
Before Mr. Thoma had each of the joint returns in question filed electronically, he provided petitioner with a copy of the joint return that was to be filed.2
Petitioner did not review the copy of the 2009 joint return or the copy of the 2010
joint return that Mr. Thoma provided to her. Instead, after Mr. Thoma provided
her a copy of each of the joint returns in question, she immediately placed it in a
file in her office.
Each of petitioner and intervenor authorized Mr. Thoma to file electronically each of the joint returns in question. Neither petitioner nor intervenor
reviewed each of the joint returns in question before each of them was filed.
Petitioner and intervenor included Schedule A, Itemized Deductions

(Schedule A), with each of their 2009 joint return (2009 Schedule A) and their
2010 joint return (2010 Schedule A). In the 2009 Schedule A and the 2010
Schedule A, they claimed, inter alia, "Home mortgage interest and points" of
$67,395 and $41,966, respectively.
2Although the record establishes that Mr. Thoma provided petitioner with a
copy of each of the 2009 joint return and the 2010 joint return that was to be filed
either by visiting her office and giving her a paper copy or by emailing a copy to
her, the record does not establish which of those two methods Mr. Thomas used to
do so.

-8[*8] Petitioner and intervenor included the 2009 FWM Schedule C with their
2009 joint return and the 2010 FWM Schedule C with their 2010 joint return. In

their 2009 FWM Schedule C, petitioner and intervenor showed "Gross receipts or
sales" of $632,657 and claimed, inter alia, "Other expenses" of $330,495. Those
"Other expenses" included, inter alia, "software upgrades" of $28,740, "employee
health/fitness" of $3,144, "continuing ed & cert upgrade" of $24,240, and "shared
commissions" of $175,810. In their 2010 FWM Schedule C, petitioner and
intervenor showed "Gross receipts or sales" of $725,693, and claimed, inter alia,
mortgage interest of $20,983 and "Other expenses" of $390,494. Those "Other
expenses" included, inter alia, "continuing education" of $21,100 and "shared
fees/co-op broker" of $260,169.
Petitioner and intervenor also included the 2009 law firm Schedule C with

their 2009 joint return and the 2010 law firm Schedule C with their 2010 joint return. In the 2010 law firm Schedule C, they claimed, inter alia, "Other expenses"
of $51,786. Those "Other expenses" included, inter alia, "Pen Contr included in

K-1 inc" of $32,500.
Around January 10, 2011, petitioner and intervenor separated. On November 16, 2011, they were divorced pursuant to a judgment of dissolution of marriage (divorce judgment) that the Circuit Court of St. Louis County, Missouri,

-9[*9] entered. The divorce judgment incorporated a marital settlement and separation agreement between petitioner and intervenor (separation agreement), which
provided the following with respect to the division of the business interests of
petitioner and intervenor:

4.8

Business/Partnership Interests:

a. Husband owns a partnership interest [in] Stinson Morrison
Hecker, LLP. Husband shall be awarded all of his right, title and
interest in and to Stinson Morrison Hecker, LLP, including
Husband's capital account.

b. Wife owns a membership interest in Foundation Wealth
Management, LLC. Wife shall be awarded all of her right, title and
interest in and to Foundation Wealth Management, LLC, including all
assets and liabilities thereof, and specifically including the Private
Bank loan on which Foundation Wealth Management is the obligor.
c. Each party shall warrant and defend, and indemnify and hold
the other harmless from any and all obligations, financial liability,
indebtedness, claims or charges associated with his or her awarded
ownership or interest in the aforementioned entities, including the
cost of a reasonable defense (attorney's fees, litigation expenses and
court costs) arising therefrom.
Around September 2011, respondent initiated an examination of the joint
returns in question. Mr. Thoma represented petitioner and intervenor during that
exammation.
On August 29, 2012, respondent sent to Mr. Thoma Form 4549, Income Tax

Examination Changes (Form 4549), in which respondent proposed certain deter-

- 10 [*10] minations with respect to the joint returns in question (2009 and 2010 Form

4549). Respondent included with the 2009 and 2010 Form 4549 a workpaper
explaining those proposed determinations. (The Court shall refer collectively to

the 2009 and 2010 Form 4549 and the workpaper included with that form as
respondent's proposed determinations).
In respondent's proposed determinations, respondent proposed to disallow,
inter alia, the respective expenses for "shared commissions" and "shared fees/coop broker" that petitioner and intervenor had claimed as part of "Other expenses"
in the 2009 FWM Schedule C and the 2010 FWM Schedule C, respectively. In
respondent's determinations, respondent also proposed to disallow, inter alia, "Pen
Contr included in K-1 inc" of $32,500 that petitioner and intervenor had claimed
as part of "Other expenses" in the 2010 law firm Schedule C. On August 31,
2012, Mr. Thoma sent a copy of respondent's proposed determinations to each of
petitioner and intervenor.

On September 12, 2012, intervenor submitted to respondent completed
Form 8857, Request for Innocent Spouse Relief (Form 8857), with respect to the
taxable years 2009 and 2010 (intervenor's Form 8857). In that form, intervenor
indicated that he did not know that there was anything incorrect or missing in the
joint returns in question. He then stated in pertinent part in intervenor's Form

- 11 [*11] 8857: "I did not have any knowledge regarding the financial status of my
wife's [petitioner's] business [FWM], except that she seemed successful in it."
On October 24, 2012, petitioner submitted to respondent completed Form
8857 with respect to the taxable years 2009 and 2010 (petitioner's Form 8857). In
a cover letter attached to petitioner's Form 8857, petitioner stated in pertinent part:
Attached please find my Form 8857 and attachments. In short, I am
every bit as "innocent" as my ex-husband in that we both relied on the
expertise of our tax preparer. Our returns were not completed until
the last minute. We trusted that they were prepared accurately. We
paid the tax as determined on those returns. Our joint, married household in 2009 and 2010 benefitted from the temporary, erroneous tax
relief.
In petitioner's Form 8857, she did not check "yes" or "no" in response to a
question asking whether she was the victim of spousal abuse or domestic violence
during 2009 or 2010. In that form, she indicated that she did not know that there
was anything incorrect in the joint returns in question because she relied on Mr.
Thoma's expertise. In petitioner's Form 8857, petitioner stated in pertinent part:
"It would be unfair to hold me solely (or in the majority) liable for the tax. My exhusband and I are equally innocent in relying on our tax preparer." In an addendum to petitioner's Form 8857, petitioner stated in pertinent part:

In February or March of each year, Bob Lattinville [intervenor] and I
would meet with Mr. Thoma at his office in Columbia, IL. We would
drop off any tax documents we had received. My ex-husband did not

- 12 [*12] typically have his K-1 from his law firm until after those meetings. The K-1 usually arrived very close to April 15. The tax preparer would then prepare our joint return. Mr. Thoma would send us
the e-filing form for signature and coupons for amounts owed as well
as quarterly estimates for the coming year. My ex-husband and I did
not review the returns; we simply relied on our preparer, assumed he
had prepared the returns accurately and sent in our money.
On October 26, 2012, petitioner submitted to respondent completed Form
12508, Questionnaire for Non-Requesting Spouse (Form 12508). In petitioner's
Form 12508, petitioner stated that she and intervenor "each had separate accounts
used for our separate businesses." In an addendum to petitioner's Form 12508,
petitioner stated in pertinent part:
9. The changed items primarily relate to Ms. Hardin's [petitioner's]
business. As explained herein, Mr. Thoma either negligently or
fraudulently took substantial deductions for fees in 2009 and fees
share with coop broker in 2010. Ms. Hardin does not know whether
Mr. Lattinville [intervenor] reviewed the returns at issue before
signing them, but does not believe that either she or Mr. Lattinville
actually received the returns until after they were filed. * * *
On November 13, 2012, intervenor submitted to respondent completed
Form 12508. In intervenor's Form 12508, intervenor stated in pertinent part:
My ex-wife (the "Individual") [petitioner] and I each maintained our
own tax records. Throughout the year the Individual would meet with
our tax preparer, Mr. Thoma. Then, in or about February of the year
following the tax year for which returns were being prepared, the
Individual and I would meet with Mr. Thoma and deliver documentation for the preparation of your [sic] tax returns. At that meeting,
there were typically a few documents that we had not received that

- 13 [*13] were necessary to complete our returns. After we received
those documents in late February and early March we would schedule
another meeting with Mr. Thoma and delver [sic] the remaining
documents. Then, Mr. Thoma would prepare our taxes and send the
returns and an electronic filing document for our signature.
I reviewed the tax returns to confirm the accuracy of the documents I
provided Mr. Thoma and the taxable income attributable to my
partnership interest. I did not review any underlying document or
item pertaining to the Individual's business and its taxable income.
At a time not established by the record, respondent made an initial determination (initial section 6015(c) determination) that each of petitioner and intervenor
is entitled to relief under section 6015(c). In that initial determination, respondent
concluded that intervenor is entitled to relief under section 6015(c) with respect to,
inter alia, (1) the portion of the proposed deficiency for the taxable year 2009 that
was attributable to the disallowance of the expenses for "shared commissions"
claimed in the 2009 FWM Schedule C and (2) the portion of the proposed deficiency for the taxable year 2010 that was attributable to the disallowance of the
expenses for "shared fees/co-op broker" claimed in the 2010 FWM Schedule C.
In the initial section 6015(c) determination, respondent further concluded that

petitioner is entitled to relief under section 6015(c) with respect to the portion of
the deficiency for the taxable year 2010 that was attributable to the disallowance

- 14 [*14] of the expenses for "Pen Contr included in K-1 inc" claimed in the 2010 law
firm Schedule C.

On January 29, 2013, petitioner's representative, who is also the attorney of
record in this case, sent to respondent a letter (petitioner's appeal) in which she
appealed the initial determination that intervenor is entitled to relief under section
6015(c). At a time not established by the record, respondent assigned petitioner's
appeal to an Appeals officer in respondent's Appeals Office.
On May 7, 2013, petitioner's representative sent to the Appeals officer a
letter in support of her appeal. In that letter, petitioner's representative argued that
intervenor should have been denied relief under section 6015(c) because he had
actual knowledge that the expenses for "shared commissions" and "shared fees/coop broker" in the respective 2009 FWM Schedule C and the 2010 FWM Schedule
C were erroneous.
On June 19, 2013, intervenor sent to the Appeals officer a letter in which he
opposed petitioner's appeal. In that letter, intervenor argued that respondent had
properly granted intervenor relief under section 6015(c) because intervenor was
not involved in the operation of FWM and had no actual knowledge of any
erroneous expenses that that organization had claimed in the 2009 FWM Schedule
C and the 2010 FWM Schedule C, respectively.

- 15 [*15] At a time not established by the record, the Appeals officer affirmed the
initial section 6015(c) determination that each of petitioner and intervenor is
entitled to certain relief under section 6015(c).
On November 19, 2013, respondent issued to petitioner a notice of deficiency for the taxable years 2009 and 2010 (notice). In the notice, respondent
determined, inter alia, to (1) decrease by $9,610 the "Home mortgage interest and
points" claimed in the 2009 Schedule A, (2) decrease by $10,407.23 the "Gross
receipts or sales" showed in the 2009 FWM Schedule C, and (3) disallow the following "Other expenses" claimed in the 2009 FWM Schedule C: "software upgrades" of $16,215, "employee health/fitness" of $3,144, "continuing ed & cert
upgrade" of $24,240, and "shared commissions" of $175,810. In the notice,
respondent further determined, inter alia, to (1) increase by $7,736 the "home
mortgage interest and points" claimed in the 2010 Schedule A, (2) disallow "Pen
Contr included in K-1 inc" of $32,500 claimed as an "Other expenses" in the 2010
law firm Schedule C, (3) increase by $17,953.35 the "Gross receipts or sales"
showed in the 2010 FWM Schedule C, (4) disallow mortgage interest of $20,983
claimed in the 2010 FWM Schedule C, and (5) disallow the following "Other
expenses" claimed in the 2010 FWM Schedule C: "continuing education" of
$21,100 and "shared fees/co-op broker" of $260,169. In the notice, respondent

- 16 [*16] further determined that petitioner is liable for the taxable years 2009 and
2010 for an accuracy-related penalty under section 6662(a).
In a so-called understatement allocation worksheet that respondent included
with the notice (allocation worksheet), respondent indicated that intervenor is
entitled to relief under section 6015(c) with respect to (1) the portion of the
deficiency for the taxable year 2009 that was attributable to respondent's proposed
determinations with respect to the 2009 FWM Schedule C and (2) the portion of
the deficiency for the taxable year 2010 that was attributable to respondent's
proposed determinations with respect to the 2010 FWM Schedule C. In that worksheet, respondent further indicated that petitioner is entitled to relief under section
6015(c) with respect to the portion of the deficiency for the taxable year 2010 that
was attributable to respondent's proposed determination with respect to the 2010
law firm Schedule C.3
In the notice, respondent set forth the following with respect to the respective claims under section 6015 that petitioner and intervenor had made:
Mr. Lattinville [intervenor] * * * requested Innocent Spouse relief
under IRC 6015(b), IRC 6015(c) or IRC 6015(f) for the tax years
ending December 31, 2009 and December 31, 2010. Relief has been

3Respondent made no determination in the notice with respect to the 2009
law firm Schedule C.

- 17 [*17] granted. Mr. Lattinville is individually liable for $11,872.21
plus interest. See attached allocation worksheet.
Ms. Hardin [petitioner] * * * requested Innocent Spouse relief under
IRC 6015(b), IRC 6015(c) or IRC 6015(f) for the tax years ending
December 31, 2009 and December 31, 2010. Relief has been granted.
Ms. Hardin is individually liable for $186,575.79 plus penalties and
interest. See attached allocation worksheet.
On November 19, 2012, during respondent's examination of the years at
issue, petitioner filed a return for the 2011 taxable year (2011 return). In Form

4549 dated May 28, 2013, respondent proposed certain determinations with
respect to petitioner's 2011 return. Those proposed determinations included (1) an
adjustment that increased petitioner's taxable income from $133,246 to $251,915
and that was entirely attributable to determinations that respondent had proposed
relating to the Schedule C for FWM that petitioner had included with her 2011
return and (2) an accuracy-related penalty under section 6662(a) of $17,376.20.
On January 13, 2014, petitioner filed a petition with the Court in which she
argued that respondent had erred in granting intervenor relief under section

6015(c).
On August 4, 2014, respondent filed a motion for summary judgment. In

that motion, respondent asked the Court to hold that it does not have jurisdiction
over this case. In that motion, respondent indicated that petitioner's attorney of

- 18 [*18] record had represented to counsel for respondent that petitioner is not
disputing the determinations in the notice. Instead, her only dispute is whether
respondent should have granted relief to intervenor under section 6015(c).
Respondent argues in respondent's motion for summary judgment that the Court
does not have jurisdiction under section 6015 to resolve the only dispute that
petitioner's attorney of record represented remains in this case.
On September 11, 2014, the Court held a telephonic conference (September
11, 2014 telephonic conference) with petitioner's counsel, intervenor's counsel,
and respondent's counsel. During that telephonic conference, the Court advised
respective counsel for the parties that it does not have jurisdiction to address
petitioner's allegation in the petition that respondent erred in granting relief to
intervenor under section 6015(c). The Court further informed respective counsel
for the parties during the September 11, 2014 telephonic conference that it would
deny respondent's motion for summary judgment without prejudice and entertain a

motion by petitioner for leave to file an amendment to petition or an amended
petition.

By order dated September 12, 2014, the Court denied respondent's motion
for summary judgment without prejudice.

- 19 [*19] On September 22, 2014, petitioner filed a motion for leave to file amended
petition and lodged an amended petition. On October 15, 2014, the Court granted
that motion and had petitioner's amended petition filed as of that date. In that
amended petition, petitioner alleged that she is entitled to relief under section
6015(f) for each of the taxable years 2009 and 2010 because she was abused by
intervenor and was not able to challenge the treatment of any items in the joint
returns in question for fear of intervenor's retaliation. On October 23, 2014,
respondent filed an answer to the amended petition. In that answer, respondent
denied the allegations in the amended petition in support of petitioner's claim to
relief under section 6015(f).

OPINION
Section 6013(a) provides that married taxpayers may elect to file jointly a
tax return. If a joint tax return is filed, the spouses are jointly and severally liable

for the entire tax due. Sec. 6013(d)(3); Butler v. Commissioner, 114 T.C. 276, 282
(2000). If certain requirements are met, a spouse may be relieved ofjoint and
several liability in one of three ways. See sec. 6015(b), (c), (f).
Although respondent granted petitioner relief under section 6015(c) with
respect to the portion of the deficiency for the taxable year 2010 that was attributable to respondent's determination to disallow certain expenses claimed in the

- 20 [*20] 2010 law firm Schedule C,4 she maintains that she is also entitled to relief
under section 6015(f) with respect to (1) the portion of the deficiency for the
taxable year 2009 that is attributable to the expenses for "shared commissions" in
the 2009 FWM Schedule C that respondent disallowed and (2) the portion of the
deficiency for the taxable year 2010 that is attributable to the expenses for "shared
fees/co-op broker" in the 2010 FWM Schedule C that respondent disallowed.5
(The Court shall refer to the expenses for "shared commissions" and "shared
fees/co-op broker" claimed in the 2009 FWM Schedule C and the 2010 FWM
Schedule C, respectively, that respondent disallowed as the erroneous items in
question.) Respondent and intervenor disagree.
Petitioner bears the burden of proving that she is entitled to relief under
section 6015(f). See Rule 142(a); Porter v. Commissioner, 132 T.C. 203, 210

(2009).

4Respondent made no determination in the notice with respect to the 2009
law firm Schedule C.
5In the notice, respondent made certain other determinations with respect to
the 2009 FWM Schedule C, the 2010 FWM Schedule C, the 2009 Schedule A, and
the 2010 Schedule A. As the Court understands petitioner's position, she is
claiming relief under sec. 6015(f) only with respect to the respective portions of
the deficiencies for the taxable years 2009 and 2010 that are set forth in the text.

- 21 [*21] Section 6015(f) provides:
SEC. 6015.

RELIEF FROM JOINT AND SEVERAL LIABILITY
ON JOINT RETURN.

(f) Equitable Relief.--Under procedures prescribed by the
Secretary, if-(1) taking into account all the facts and circumstances, it is
inequitable to hold the individual liable for any unpaid tax or
any deficiency (or any portion of either); and
(2) relief is not available to such individual under subsection (b) or (c), the Secretary may relieve such individual of

such liability.
Petitioner and respondent agree, and intervenor does not dispute, that the
relief that petitioner seeks is not available to her under section 6015(b) or (c),
thereby satisfying section 6015(f)(2). They disagree over whether petitioner is
entitled to relief under section 6015(f).
As directed by section 6015(f), the Commissioner of Internal Revenue has
prescribed procedures that are applicable for the years at issue and that are
generally to be used in determining whether it would be inequitable to find the
requesting spouse liable for part or all of the deficiency in question.6 See Rev.

6The Court is not bound by revenue procedures. However, we often look to
them for guidance, especially when we are presented with whether a requesting
spouse is entitled to relief under sec. 6015(f). See, e.g., Hollimon v. Commissioner, T.C. Memo. 2015-157, at *7-*8.

- 22 [*22] Proc. 2013-34, sec. 4, 2013-43 I.R.B. 397, 399-403. Those procedures
include seven threshold conditions (threshold conditions) that must be satisfied in
order for the requesting spouse to be eligible for equitable relief under section

6015(f). See id. sec. 4.01, 2013-43 I.R.B. at 399-400.
Respondent concedes, and intervenor does not dispute, that the first five
threshold conditions are satisfied.7 The parties disagree about whether the sixth8
and seventh threshold conditions are satisfied. The Court considers only the
seventh threshold condition. That is because the Court's resolution of whether
petitioner satisfies the seventh threshold condition resolves whether she is entitled
to relief under section 6015(f).
As pertinent here, the seventh threshold condition in Rev. Proc. 2013-34,

sec. 4.01(7), 2013-43 I.R.B. at 399-400, is:

7The first five threshold conditions are: (1) the requesting spouse filed a
joint return for the taxable year with respect to which he or she seeks relief;
(2) relief is not available under sec. 6015(b) or (c); (3) the claim for relief is timely
filed; (4) no assets were transferred between the spouses as part of a fraudulent
scheme by the spouses; and (5) the nonrequesting spouse did not transfer
disqualified assets to the requesting spouse. See Rev. Proc. 2013-34, sec. 4.01(1)(5), 2013-43 I.R.B. 397, 399.
8The sixth threshold condition is that the requesting spouse did not
knowingly participate in the filing of a fraudulent joint return. See Rev. Proc.

2013-34, sec 4.01(6), 2013-43 I.R.B. at 399.

- 23 [*23] (7) The income tax liability from which the requesting spouse
seeks relief is attributable (either in full or in part) to an item of the
nonrequesting spouse or an underpayment resulting from the nonrequesting spouse's income. If the liability is partially attributable to
the requesting spouse, then relief can only be considered for the
portion of the liability attributable to the nonrequesting spouse.
Nonetheless, the Service will consider granting relief regardless of
whether the understatement, deficiency, or underpayment is attributable (in full or in part) to the requesting spouse if any of the following
exceptions applies:

*

*

*

*

*

*

*

(d) Abuse. If the requesting spouse establishes that he or she
was the victim of abuse prior to the time the return was filed, and that,
as a result of the prior abuse, the requesting spouse was not able to
challenge the treatment of any items on the return, or was not able to
question the payment of any balance due reported on the return, for
fear of the nonrequesting spouse's retaliation, the Service will consider granting equitable relief even though the deficiency or underpayment may be attributable in part or in full to an item of the requestmg spouse.
As the Court understands petitioner's position, she maintains that she
satisfies the seventh threshold condition in Rev. Proc. 2013-34, sec. 4.01(7), and is
entitled to relief under section 6015(f) for the respective portions of the deficiencies for the taxable years 2009 and 2010 that are attributable to the erroneous
items in question. That is because, petitioner contends, she was abused by
intervenor and, as a result of that alleged abuse, she was unable to challenge the
erroneous items in question for fear of intervenor's retaliation. Respondent

- 24 [*24] "disputes that any alleged abuse prevented petitioner from challenging the
returns in question."

In support of petitioner's contention that she was not able to challenge the
erroneous items in question for fear of intervenor's retaliation, petitioner relies
only on her own testimony.9 The Court did not find petitioner to be credible. The
Court found her testimony to be in certain material respects evasive, vague,
conclusory, and/or inconsistent with certain other evidence in the record that the
Court found to be credible. The Court shall not rely on the testimony of petitioner
to establish her position in this case. See, e.g., Tokarski v. Commissioner, 87 T.C.

74, 77 (1986).
The facts that the Court has found in this case belie petitioner's contentions
that she was abused by intervenor and that, as a result of that alleged abuse, she
was not able to challenge the erroneous items in question for fear of intervenor's
retaliation. Suffice it to say here that it was petitioner, not intervenor, who
operated and controlled FWM. In addition, it was petitioner who declined to
review the 2009 joint return and the 2010 joint return before Mr. Thoma had those
9Petitioner relies on her own testimony and on the respective testimonies of
certain other witnesses in order to establish her claim that intervenor abused her.
At the conclusion of the trial in this case, the Court commented on the respective
testimonies of those other witnesses, as well as the respective testimonies of
petitioner and intervenor. The Court will not repeat those comments here.

- 25 [*25] returns filed electronically. Moreover, around January 10, 2011, before the
2010 joint return was even prepared, let alone filed, petitioner and intervenor
separated.
We believe that petitioner's contentions that she was abused by intervenor
and that, as a result of that alleged abuse, she was not able to challenge the
erroneous items in question for fear of intervenor's retaliation were an afterthought that occurred to petitioner after the Court had informed respective counsel
for the parties during the September 11, 2014 telephonic conference that, as
respondent maintained in respondent's motion for summary judgment, the Court

does not have jurisdiction to consider whether respondent should have granted
relief to intervenor under section 6015(c). Indeed, at the time of that telephonic
conference, petitioner had not claimed in the petition in this case that intervenor's
alleged abuse prevented her from challenging the erroneous items in question for
fear of intervenor's retaliation. Nor had she made that claim in petitioner's Form
8857, in petitioner's Form 12508, or in petitioner's appeal during respondent's

administrative proceedings to consider petitioner's claim to relief under section
6015. The first time that petitioner claimed that intervenor's alleged abuse
prevented her from challenging the erroneous items in question for fear of
intervenor's retaliation was in the amended petition that the Court allowed her to

- 26 [*26] file after the September 11, 2014 telephonic conference in which it had
advised the parties' respective counsel, inter alia, that it would deny respondent's
motion for summary judgment without prejudice.

On the record before the Court, the Court finds that petitioner has failed to
carry her burden of establishing that, as a result of intervenor's alleged abuse, she
was not able to challenge the treatment of the erroneous items in question for fear
of intervenor's retaliation. On that record, the Court further finds that petitioner

has failed to carry her burden of establishing that she satisfies the seventh thresh-

old condition in Rev. Proc. 2013-34, sec. 4.01(7), 2013-43 I.R.B. at 399-400.¹°
Based upon the Court's examination of the entire record before the Court,
the Court finds that petitioner has failed to carry her burden of establishing that

¹°Assuming arguendo that petitioner had carried her burden of establishing
that all seven of the threshold conditions were satisfied, the Court would still find
that the factors enumerated in Rev. Proc. 2013-34, sec. 4.03, 2013-43 I.R.B. at
400-403, weigh against granting petitioner relief under sec. 6015(f). Specifically,
on the record before the Court, the Court finds that petitioner would not suffer
economic hardship if relief is not granted; petitioner had reason to know of the
erroneous items in question that gave rise to the portions of the respective
deficiencies for the taxable years 2009 and 2010 for which she is claiming relief
under sec. 6015(f); pursuant to the separation agreement petitioner has a legal
obligation to hold intervenor harmless from any and all obligations relating to her
ownership of FWM, including tax obligations; petitioner benefited significantly
from the respective understatements attributable to the erroneous items in
question; and petitioner has failed to comply with the tax laws for at least one year
after the taxable years at issue, namely, the taxable year 2011. See id.

- 27 [*27] she is entitled to relief under section 6015(f) with respect to the respective
portions of the deficiencies for the taxable years 2009 and 2010 that are attributable to the erroneous items in question.
The Court considers now whether, as intervenor maintains, the Court should
impose a penalty on petitioner under section 6673(a)(1) and sanction her attorney
of record under section 6673(a)(2). Section 6673(a)(1) authorizes the Court to
require a taxpayer to pay to the United States a penalty in an amount not to exceed
$25,000 whenever it appears to the Court, inter alia, that a proceeding before it
was instituted or maintained primarily for delay, sec. 6673(a)(1)(A), or that the
taxpayer's position in such a proceeding is frivolous or groundless, sec.
6673(a)(1)(B). Section 6673(a)(2) authorizes the Court to require any attorney
admitted to practice before the Court who has multiplied the proceedings in any
case unreasonably and vexatiously to pay personally the excess costs, expenses,
and attorneys' fees reasonably incurred because of such conduct.
The Court believes that petitioner instituted and maintained this case
primarily for delay. The Court also believes that petitioner has advanced and
maintained a position in this case that is groundless. Nonetheless, the Court shall
not at this time impose a penalty under section 6673(a)(1) on petitioner. The
Court cautions her that she may be subject to such a penalty if in the future she

- 28 [*28] institutes or maintains a proceeding in this Court primarily for delay and/or
her position in any such proceeding is frivolous or groundless. See Abrams v.

Com-missioner, 82 T.C. 403, 409-413 (1984); White v. Commissioner, 72 T.C.
1126, 1135-1136 (1979).
The Court believes that petitioner's attorney of record multiplied the
proceedings in this case unreasonably and vexatiously. Nonetheless, the Court
shall not sanction him at this time under section 6673(a)(2). The Court cautions
him that he may be subject to such a sanction if in the future he multiplies the
proceedings in any case before this Court unreasonably and vexatiously. See N_is

Family Tr. v. Commissioner, 115 T.C. 523, 547-553 (2000).
The Court has considered all of the contentions and arguments of the parties
that are not discussed herein, and the Court finds them to be without merit,
irrelevant, and/or moot.
To reflect the foregoing,

Decision will be entered for
respondent.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Atax-court%3Ae1cb6c6f60d64466. Public record. Not legal advice.