Kannard v. Comm'r

T.C. Summary Opinion 2010-22
UNITED STATES TAX COURT
KATHERINE WITHERSPOON KANNARD, Petitioner AND
JAMES R. KANNARD, JR., Intervenor v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 5633-07S. Filed March 1, 2010.
Katherine Witherspoon Kannard, pro se.
James R. Kannard, Jr., pro se.
John R. Bampfield, for respondent.
CARLUZZO, Special Trial Judge: This case was heard
pursuant to the provisions of section 7463.1 Pursuant to section
7463(b), the decision to be entered is not reviewable by any
1
Unless otherwise indicated, section references are to the
Internal Revenue Code of 1986, as amended, in effect for the
relevant period.
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other court, and this opinion shall not be cited as precedent for
any other case.
In this section 6015(e) proceeding, petitioner seeks to be
relieved from a 2004 Federal income tax liability assessed
against her because she filed a joint Federal income tax return
for that year. Consistent with respondent’s determination
denying her administrative request for relief, petitioner’s
former spouse, James R. Kannard, Jr. (intervenor), opposes
relief.
Background
Some of the facts have been stipulated and are so found.
At the time the petition was filed, petitioner and intervenor
resided at separate addresses in Florida.
Petitioner and intervenor were married in July 1988; they
separated during 2005 and were divorced in October 2007. They
have a daughter and twin sons, all minors and all subjects of a
hostile custody dispute during the divorce proceedings. A social
worker involved in the custody dispute described the relationship
between petitioner and intervenor as a “whirlwind of animosity”,
riddled with he-said, she-said accusations of spousal abuse,
child abuse, deception, larceny, and adultery. From their
respective presentations at trial it is clear that the whirlwind
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has lost none of its force.2 Petitioner’s unpaid Federal income
tax liability and the resultant dispute with the Internal Revenue
Service over that liability no doubt exaggerated the resentment
each feels towards the other. The trial testimony of each was
informed not so much by any good-faith attempt to objectively
describe relevant events, but by the animosity witnessed and
described by the social worker. Consequently, rather than accept
one version over the other, we reject as incredible their
conflicting descriptions of the same events. That being so, our
conclusions are supported by factual findings based almost
exclusively upon stipulations, undisputed testimony, or written
records.
Petitioner graduated with a bachelor of arts degree in
international political science from Emory University in 1988.
Starting in 2001 and at all times relevant, she was employed as a
consultant by Uniphy Management Systems (Uniphy), a company that
provides medical insurance services to physicians.
In 1998, after interrupting his college education to serve
in the U.S. Navy, intervenor graduated with a bachelor of
science degree in electrical engineering from the University of
2
Hostilities carried over from disputed domestic relations
matters between former or estranged spouses surface all too
frequently in sec. 6015(e) proceedings. See, e.g., Stergios v.
Commissioner, T.C. Memo. 2009-15.
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Tennessee. Soon after graduation he accepted a position with
Honeywell International, Inc. (Honeywell), in Tampa, Florida.
Petitioner’s and intervenor’s salaries from their respective
employers were deposited into one or the other of two joint
checking accounts, one of which was maintained at the GTE Federal
Credit Union (the GTE joint account). These joint checking
accounts, in addition to a number of credit card accounts, were
used to pay the couple’s living expenses.
Intervenor’s employment with Honeywell ended in February
2004. Soon thereafter he withdrew approximately $11,000 from his
employer-based retirement plan (the pension distribution). He
also applied for and received unemployment compensation before
starting a new job in March 2004. The pension distribution and
unemployment compensation were deposited into the GTE joint
account.
For each year that they were married, including 2004 and the
year of their divorce, petitioner and intervenor elected to file
a joint Federal income tax return. The 2004 joint Federal income
tax return was prepared and electronically filed using a
computer-based income tax return preparation program (the 2004
joint return).
The income reported on the 2004 joint return does not
include the above-referenced pension distribution or unemployment
compensation (the omitted items). The tax shown on the 2004
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joint return does not include the applicable section 72(t)
additional tax attributable to the pension distribution.
Email communications between petitioner and intervenor
during the relevant period demonstrate that petitioner was aware
of the omitted items.
Respondent determined a deficiency in petitioner and
intervenor’s 2004 Federal income tax and issued a notice of
deficiency to them on December 11, 2006. The deficiency
determined in that notice of deficiency takes into account the
omitted items and the section 72(t) additional tax attributable
to the pension distribution. Neither petitioner nor intervenor
petitioned this Court in response to that notice of deficiency,
and the deficiency and related amounts were assessed in due
course.
Discussion
In general, spouses may elect to file a joint Federal income
tax return for a year even if one spouse had no obligation to
file a return for that year. Sec. 6013(a). Spouses electing to
do so are jointly and severally liable not only for the entire
amount of tax reported on the return, but also for any deficiency
subsequently determined as well, even if all income giving rise
to the tax liability is allocable to only one of them. Sec.
6013(d)(3); Butler v. Commissioner, 114 T.C. 276, 282 (2000); see
sec. 1.6013-4(b), Income Tax Regs.
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Subject to various conditions and in a variety of ways, an
individual who has made a joint return may elect to seek relief
from the joint and several liability arising from that joint
return. Sec. 6015.
There are three types of relief available under section
6015. In general, subsection (b) provides full or apportioned
relief from joint and several liability, subsection (c) provides
proportionate tax relief to divorced or separated taxpayers, and
subsection (f) provides equitable relief from joint and several
liability if relief is not available under subsection (b) or (c).
Petitioner requests relief under all of the above-referenced
subsections of section 6015. Because she was aware of the
omitted items, however, she is not entitled to relief under
subsection (b) or (c). See sec. 6015(b)(1)(C), (c)(3)(C);
Stevens v. Commissioner, 872 F.2d 1499, 1505 (11th Cir. 1989),
affg. T.C. Memo. 1988-63; Charlton v. Commissioner, 114 T.C. 333,
341 (2000); Bokum v. Commissioner, 94 T.C. 126, 148 (1990), affd.
992 F.2d 1132 (11th Cir. 1993). That being so, we consider, de
novo, her entitlement to equitable relief under subsection (f).
Porter v. Commissioner, 132 T.C. __ (2009).
A taxpayer is entitled to section 6015(f) relief if, taking
into account all the facts and circumstances, it would be
inequitable to hold the taxpayer liable for any unpaid tax or
deficiency. Sec. 6015(f)(1). Taking into account the factors
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the Commissioner considers in matters such as this, see Rev.
Proc. 2003-61, 2003-2 C.B. 296, we find that it would not be
inequitable to hold petitioner liable for joint and several
income tax liability that arises from the joint 2004 Federal
income tax return filed with intervenor, and therefore petitioner
is not entitled to relief from that liability under section
6015(f).
Little would be gained by burdening this opinion with a
discussion of each of the factors contained in the above-
referenced revenue procedure. See sec. 7463(a) (last sentence).
Suffice it to note that petitioner’s actual knowledge of the
omitted items, although not determinative, weighs heavily against
relief, see Stolkin v. Commissioner, T.C. Memo. 2008-211; Rev.
Proc. 2003-61, sec. 4.03(2)(a)(iii), 2003-2 C.B. at 298, as does
her failure to establish that: (1) She did not significantly
benefit from the omitted income; or (2) she would suffer economic
hardship if she were required to pay the 2004 income tax
liability.
To reflect the foregoing,
Decision will be entered
for respondent.