Abused, But Not Innocent

 Here’s an example of the Law of Unintended Consequences, which trumps many a well-crafted litigation, Kimberly A. Sorrentino, Petitioner, and George A. Chaudoin, Intervenor, 2014 T. C. Sum. Op. 99, filed 9/24/14, as told by STJ Daniel A. (“Yuda”) Guy.

No doubt Kimberly was abused by ex-spouse George. She lost three jobs because he hounded her, and finally wound up seeking psychiatric help. They finally divorced, but the decree just says they’ll file separate returns thereafter, nothing about past liabilities.

“The record provides a dismal picture of an extremely dysfunctional marriage that quickly deteriorated into separation in mid-March 2008 and a final divorce three months later. Petitioner’s sister testified credibly and convincingly that by the time petitioner left intervenor she was so emotionally traumatized and distraught that she was contemplating suicide. Her treatment and recovery spanned the better part of the next 12 months. Against this backdrop, it is not difficult to comprehend how petitioner may have decided in early 2008 to abandon the practice of filing a joint return with intervenor. We likewise have no reason to doubt petitioner’s statement that she believed (albeit erroneously) that she had sufficient income tax withholding so that there was no pressing need to file a separate return for 2007.” 2014 T. C. Sum. Op. 99, at p. 12.

Meanwhile, Kimberly took a couple of IRA distributions in 2007, some of whose proceeds she claims she gave George for household expenses, but he says she didn’t.

Howbeit, there’s a MFJ e-filed 1040 for that year, but the electronic authorization was signed only by George, and none appears for Kimberly. Only one IRA drawdown is disclosed, and that’s claimed to be a rollover (which it wasn’t). The paid preparer doesn’t testify on the trial, so although George claims Kimberly was there when the return was filed and agreed to it, and Kimberly claims she wasn’t and didn’t, STJ Yuda believes Kimberly, because George’s testimony didn’t wash.

But there’s no doubt the IRA drawdowns were made by Kimberly, however she spent the proceeds thereof, and she neither filed a separate return nor was aged above the magic 59-1/2 years.

STJ Yuda finds there was no joint return. So Kimberly wins, right?

Wrong.

“Considering all the facts and circumstances, we conclude that petitioner did not intend to file a joint income tax return with intervenor for 2007, and the return at the center of this controversy is not a valid joint return as contemplated by section 6013(a). It follows that a prerequisite to the application of section 6015 is lacking, and petitioner is ineligible for spousal relief for the taxable year 2007 by way of this proceeding.” 2014 T. C. Sum. Op. 99, at pp. 14-15.

How come, you will ask.

Well, STJ Yuda will tell you.

“If certain requirements are met, a spouse may be relieved of joint and several liability under section 6015. No relief is available under section 6015, however, if the taxpayer did not file a joint income tax return. See Raymond v. Commissioner, 119 T.C. 191, 194-197 (2002). Section 6015(e) vests the Court with jurisdiction to review the Secretary’s final determination of spousal relief.” 2014 T. C. Sum. Op. 99, at p. 10.

Anyway, the items giving rise to the deficiency were both Kimberly’s, not George’s. And, of course, there was no joint return.