In Uncategorized on 06/21/2012 at 16:25

Doesn’t Matter, She Was In Too Deep

So sorry, says Judge Marvel to Sari Diehl, in Sari F. Deihl, 2012 T.C. Mem. 176, filed 6/21/12, only partial innocent spouse for you, 50%.

It’s the usual cocktail of facts, which occupies 37 pages of Judge Marvel’s prose, but I’ll spare you. The facts of your case will vary at least as much as your mileage.

But what’s interesting is the “blended” approach Tax Court will take post-Notice 2012-8, 2012-4 I.R.B. 309, which revised the old standby Rev. Proc. 2003-61, 2003-2 C.B. 296 (see my blogpost “Innocence Is Bliss,” 1/6/12).

Now both parties want Tax Court to use Notice 2012-8 standards and not the old Rev. Proc. 2003-61. Tax Court held a conference call in January on the subject, and the parties were agreed.

But Judge Marvel isn’t. “…in Sriram v. Commissioner, T.C. Memo. 2012-91, slip op. at 9 n.7, we took the position that we would ‘continue to apply the factors in Rev. Proc. 2003-61, 2003-2 C.B. 296, in view of the fact that the proposed revenue procedure is not final and because the comment period under the notice only recently closed.’ Additionally, because our holding in Sriram did not turn on any single factor as revised in the proposed revenue procedure, we called attention in the opinion to the effect, if any, of a revised factor only to the extent we deemed it necessary for clarity. Id. We adopt a similar approach here. We shall decide whether petitioner is entitled to relief under section 6015(f) by considering all of the relevant facts and circumstances, evaluating them through the prism of Rev. Proc.  2003-61, supra, and noting where appropriate how the analysis used in Rev. Proc. 2003-61, supra, would change if the proposed revenue procedure in Notice 2012-8, supra, had actually been finalized.” 2012 T. C. Mem. 176, at p. 29.

But, of course, facts and circumstances rule (Sir Ed Elgar really needed to write a march using that name). So preponderance-of-evidence, credibility of witnesses and de novo standard and de novo scope of review bring Judge Marvel to the same conclusion, whatever yardsticks the parties want to use. “In any event, our approach to deciding whether petitioner qualifies for relief under section 6015(f) and our conclusion remain the same regardless of whether we apply the analysis of Rev. Proc. 2003-61, supra, or adopt the approach proposed in Notice 2012-8, supra.” 2012 T. C. Mem. 176, at p. 29.

Sari’s tax problems stemmed from two corps she and her late husband founded and owned. She was enough involved in operations and management so her ownership wasn’t merely nominal. Her claimed abuse wasn’t substantiated by hospital or police reports, and her son’s testimony that Daddy was a bad actor isn’t enough, as Sonny stands to gain a lot of cash if Mommy’s tax problems go away.

So either way, sorry, Sari.

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