In Uncategorized on 01/04/2018 at 16:51

Judge Cohen is dealing with Section 6015(c) apportioned liability, and needs to find out what actual knowledge Colin C. Bishop had of the withdrawal from his ex’s inherited IRA.

Did Colin need what the great French doubtmeister denominated a “clara quaedam & distincta perceptio ejus quòd affirmo?” I need not, of course, translate.

Not quite, but close. See Colin C. Bishop, Petitioner, and Lisa Bishop, Intervenor, 2018 T. C. Sum. Op. 1, filed 1/4/18.

The parties were temporarily separated during the year at issue, permanently the next, and divorced the year after that. Lisa had inherited her late Dad’s IRA, and Colin and Lisa had reported her drawdowns on their joint returns in previous years. The cash went into their joint checking account, from which it was drawn to pay their daughter’s expenses.

Colin claimed Lisa never told him about the draw for the year at issue, and IRS bought his story. Lisa intervened, claiming Colin knew. But did he “actually know” or only “constructively know?”

“Section 6015(c) differs from the relief provisions of subsections (b) and (f), under which relief may be denied if the party requesting relief had constructive knowledge of the item giving rise to the deficiency.” 2018 T.C. Sum. Op. 1, at p. 5.

OK, but where is burden of proof when three parties are scuffling? Why, preponderance, of course.

Colin claimed Lisa deceived him by not telling him about the IRA drawdown; he can’t show she affirmatively lied. He admits he should have checked out the bank statements for the joint account, which would have showed the hefty number Lisa drew and deposited. And he drew checks and cash from the account after the drawdown hit.

But they both admit they forgot about the drawdown when, seven months thereafter, they handed their trusty preparer the dope on the year’s taxable activity. No 1099-R? Well, not that got to the preparer.

“The history of withdrawals from the retirement account used by the parties over a period of years and the transactions by petitioner with reference to the joint bank account support a conclusion that petitioner should have known about the distribution. The amount was very large in relation to the average balances and other transactions in the account. There is no evidence, however, that petitioner saw the bank records before the joint return for [year at issue] was filed. His denials are not incredible, implausible or contradicted by direct evidence. See Culver v. Commissioner, 116 T.C. 189; Richard v. Commissioner, T.C. Memo. 2011-144. Regardless of the strong indications of constructive knowledge, the evidence falls short of establishing actual knowledge of any specific amount of the distribution in [year at issue].” 2018 T. C. Sum. Op. 1, at p. 7.

Judge Cohen gives Colin the Cartesian win.

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