Schroeder v. Comm'r , 2007 Tax Ct. Summary LEXIS 214 ( 2007 )

T.C. Summary Opinion 2007-204
UNITED STATES TAX COURT
THOMAS A. SCHROEDER, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 4207-06S. Filed December 6, 2007.
Thomas A. Schroeder, pro se.
Angela J. Kennedy, for respondent.
COHEN, Judge: This case was heard pursuant to the
provisions of section 7463 of the Internal Revenue Code in effect
when the petition was filed. Pursuant to section 7463(b), the
decision to be entered is not reviewable by any other court, and
this opinion shall not be treated as precedent for any other
case. Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the year in issue.
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Respondent determined a deficiency of $1,043 in petitioner’s
Federal income tax for 2003. Petitioner does not dispute the
deficiency but claims that his former spouse should be held
liable for one-half of it.
Background
Some of the facts have been stipulated, and the stipulated
facts are incorporated in our findings by this reference.
Petitioner resided in Indiana at the time that his petition was
filed.
During 2003, petitioner was married to Kathi Schroeder.
Petitioner and Kathi Schroeder divorced in 2004.
For more than 10 years prior to 2003 and during 2003,
petitioner was a limited partner in Franklin Ridgewood Associates
Limited Partnership. Petitioner made the investment and signed
the necessary papers because Kathi Schroeder did not participate
in matters involving investments. On the partnership return,
petitioner alone was shown as the partner receiving distributions
of income; Kathi Schroeder was not shown as a partner. During
2003, petitioner received distributed income and interest income
from Franklin Ridgewood Associates Limited Partnership in the
total amount of $2,894.
On April 15, 2004, petitioner and Kathi Schroeder filed a
joint Form 1040, U.S. Individual Income Tax Return, for 2003.
The income of $2,894 received from Franklin Ridgewood Associates
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Limited Partnership was not reported on that return. In the
notice of deficiency, respondent determined a deficiency of
$1,043 attributable to the failure to report the partnership
income on petitioner’s 2003 return.
Discussion
Petitioner’s contention in this case is that his former wife
should be required to pay one-half of the deficiency and interest
attributable to the failure to report partnership income during
2003. The petition alleges that petitioner and his former wife
both shared the benefits of the partnership throughout their
marriage, she shared in the distribution of all assets including
the value of the limited partnership, and she had the ability to
pay “her fair share of the tax”.
Section 6013(d)(3) provides that, if a joint return is
filed, the tax is computed on the individuals’ aggregate income,
and liability for the resulting tax is joint and several. See
also sec. 1.6013-4(b), Income Tax Regs. A fundamental
characteristic of joint and several liability is that the
Internal Revenue Service (IRS), at its option, may proceed
against the taxpayers separately and may obtain a separate
judgment against each. See Dolan v. Commissioner, 44 T.C. 420
(1965). The decision to assess or not assess tax against one of
the spouses who filed a joint return does not prevent the IRS
from proceeding against the other. See id.; see also Kroh v.
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Commissioner, 98 T.C. 383 (1992). Petitioner was a partner in
the partnership that was the source of the unreported income in
issue.
Therefore, the Court has no basis for limiting petitioner’s
liability to 50 percent as he requests. Petitioner does not
qualify for section 6015 relief, because he admits to receiving
and failing to report the items of income. Petitioner does not
qualify for relief under section 6015(b), because he cannot
establish that he did not know or had no reason to know that
there was an understatement of tax when he signed the return.
See sec. 6015(b)(1) and (2). Petitioner testified that he was
unaware of the understatement on the return because he did not
receive the form for 2003 reporting distributions from the
partnership and he relied on his accountant to prepare the
return. In view of his long-held interest in the partnership,
however, he should have known that his income from the
partnership was not included on the return and that an
understatement would result. Because the items giving rise to
the deficiency were directly allocable to petitioner, section
6015(c) does not provide any avenue for relief. See also sec.
1.6015-3(d)(2)(iii), Income Tax Regs. (stating that erroneous
items of income are allocated to the spouse who was the source of
the income). Finally, it is not inequitable to hold petitioner
liable for the deficiency since he fails one of the threshold
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conditions for relief, i.e., “The income tax liability from which
the requesting spouse seeks relief is attributable to an item of
the * * * [other spouse]”. Rev. Proc. 2003-61, sec. 4.01(7),
2003-2 C.B. 296, 297.
To reflect the foregoing,
Decision will be entered
for respondent.