In Uncategorized on 06/25/2015 at 17:36

I feature an ending to each of two blogposts today.

Let’s take the older first, the ongoing Section 6015(b) saga of Stephanie Lynn Christie a.k.a. Stephanie Lynn Foran, Petitioner and Arthur J. Maurello f.k.a. John Foran, Intervenor, Docket No. 24515-12S, filed 6/25/15.

Steph and Arthur a.k.a John led poor Scholar John Schmittdiel, Esq., IRS’ doughty trial counsel, a merry chase through intervention and apportioned intraspousal liability, but the end is that Steph gets off the hook for $4K of tax.

To reprise the tale, see my blogposts “Tax Court Admission Exam,” 9/6/13, “He Passed the Exam,”1/9/14, and “Go To the Head of the Class,” 3/26/14.

Now Judge Buch delivers an off-the-bencher that wraps up the whole shootin’ match that took three years’ time and four orders, plus Scholar John’s post-graduate education.

“If a spouse has petitioned the Court for section 6015 relief, the non-requesting spouse has a right to intervene in the case under section 6015(e) (4). Corson v. Commissioner, 114 T.C. 354 (2000); Rule 325. By doing so, the Intervenor becomes a party. Tipton v. Commissioner, 127, T.C. 214, 217 (2006).” Order, at p. 3.

OK, Scholar John, you’re vindicated.

But via discovery, it turns out that Steph and Arthur a.k.a John had a joint brokerage account with TD Ameritrade, whence flowed Steph’s tears.

Arthur a.k.a John made a mistake when toting up the income from said account. And it was one of those finger-fehler that torpedoes the whole shebang.

Judge Buch explains: “When totaling the income from the TD Ameritrade account, Mr. Maurello made what the parties have characterized as mere mistake, understating the income by $121. Under the operation of the earned income tax credit rules, that $121 error resulted in a deficiency of over $4,000. The reason is that additional $121 of income resulted in the former couple’s having ‘excessive investment income’ as that phrase is used in section 32(i). And the result of that is the denial of their earned income tax credit.” Order, at p. 4.

Such a booboo gives rise to a thunderous exclamation, the first word of which is “Oh.” The second I cannot print in a blog meant for family reading.

So while the record is unclear, everyone seems to admit the account was a joint account, meaning the item isn’t Arthur a.k.a John’s alone, but Steph is right in there with him.

But all is not lost for Steph. Though the Section 6015(b) separation is lost, Section 6015(c) comes to the rescue.

“Ms. Christie is eligible for relief under section 6015(c). Under section 6015(c), a divorced or separated spouse may elect to limit liability for a deficiency on a joint return to the portion of the deficiency that is allocable to her under subsection (d). The election may be filed at any time after the deficiency is asserted but not later than two years after the Secretary has begun collection activities. Sec. 6015 (c) (3) (B).

“Additionally, the electing individual: (1) must no longer be married to or must be legally separated from the individual with whom the joint return was filed; or (2) must not have been a member of the same household with the individual with whom the joint return was filed during the 12-month period before the election was filed. Sec. 6015(c) (3) (A).” Order, at pp. 5-6.

Steph and Arthur a.k.a John met the 12-month cutoff, and, while Steph knew there was a joint account, she didn’t have actual knowledge (and Judge Buch stresses actual knowledge) that Arthur a.k.a John’s arithmetic was dodgy.

So Judge Buch cuts the deficiency in half, giving Steph gets half and Arthur a.k.a John the rest.

Now I don’t know what the famous divorce decree, which Arthur a.k.a John claims apportioned income tax liability but which Judge Halpern disregarded, said, but if the result is the same either way I wouldn’t be a bit surprised.

Next is my blogpost “The Right Stough?” 6/4/15. My colleague Joel E. Miller, Esq., unconfused me this morning as a New York State Bar Association Committee meeting.

What Judge Ruwe said was “cumulative” rent, in other words rent from inception of lease to end of tax year wherein the lump-sum tax payment was made. That amount is contrasted with the “cumulative” rent for the next tax year. If next year exceeds previous year, no prepaid rent. And next year must exceed previous year if even one dollar of rent was paid next year (and clearly more was paid).

Thanks, friend Joel. I am unconfused.

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