In Uncategorized on 02/11/2019 at 17:53

I take my text for the story of Traci Newburn, s/a/k/a Traci Breinholt, Docket No. 24737-17L, filed 2/11/19, an off-the-bencher from Judge Buch, from the works of Wm Sidney Porter. But unlike the widow in O. Henry’s “A Departmental Case,” it was IRS and not Traci who “came out particularly strong on Insurance.”

Traci’s late husband (referred to throughout by the punctilious Judge Buch as “Mr. Breinholt”) ran a couple businesses (hi, Judge Holmes) in a somewhat lackadaisical fashion. “He did not maintain files well. Invoices were often stacked or scattered with no discernable pattern to how they were kept. The bank account for [Mr.’s Sub S] was used to pay both personal and business expenses ranging from DVD rentals to airline tickets.

“Household finances were not handled much better. Household expenses were often paid from [Mr.’s Sub S] account. Mr. and Ms. Breinholt maintained separate bank accounts, neither of which had a significant balance during [years at issue]. Mr. Breinholt occasionally wrote checks to Ms. Breinholt on the [Mr.’s Sub S] account. She would deposit those checks into her personal account and use the funds for family expenses. Ms. Breinholt, at the direction of her husband, also wrote checks on the [Mr.’s Sub S] account.” Transcript, at pp. 4-5.

The Breinholts were also nonfilers, Traci only coming up with three years’ worth of returns a couple weeks (hello, Judge Holmes) before trial. Traci thought maybe Mr. Breinholt paid their taxes, except they lost their home on a short sale and lived a modest lifestyle (although they took vacations). Although on one of the returns they did file, Traci was listed as co-owner of Mr.’s Sub S, there’s no other paperwork on the subject, and as Traci and the late Mr. Breinholt were residents of AZ (a community property state), co-ownership via State law doesn’t count.

Confronted with a NITL, Traci sought a CDP, but never proposed a collection alternative nor provided a Form 433-A. She did seek equitable innocent spousery, but conceded the rest.

Judge Buch trudges through the multifarious factors, but one factor stands out.

“Ms. Breinholt was also the beneficiary of a $1 million life insurance policy. Ms. Breinholt has invested the life insurance proceeds, but the record does not establish the current balance of her investment account.” Transcript, at p. 7.

Innocent spousery denied.

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