Kari Jane Freman, Petitioner, T.C. Memo. 2023-10, filed 1/23/23, went down to then-spouse Rodney C. Freman (Intervenor)’s employer to take the Retirement Account drawdown from Rod’s account. She says she knew about the $90K piece, but not the entire $173K piece. And while she can’t establish spousal abuse, economic hardship, her forged signature on returns (although Judge Courtney D (“CD”) Jones does bail Kari out of admitting thereby that she has no standing for innocent spousery, by using the stipulation Kari signed that says she did sign the returns, T. C. Memo. 2023-10, at p. 12), or that she had lived separate from Rod for the requisite 12 months, Judge CD Jones manages to get Kari innocence to the extent of the overage above the $90K.

But Kari only has a high school education, and was taking care of the couple’s child. Rod was a currency trader and controlled the family’s finances.  There are two pieces here, understatement of tax in Year One and underpayments in Years Two and Three.

“Regarding the understatement of tax for [Year One], we find that this factor weighs against relief for the $90,000 Amount because Mr. Freman’s financial control does not negate Ms. Freman’s actual knowledge and clear awareness of that portion of the Retirement Account distribution. However, we find that this factor weighs in favor of relief for the amount of the distribution above the $90,000 Amount and negates Ms. Freman’s reason to know of that portion of the understatement for [Year One] because Mr. Freman assumed and sustained sole control of the finances; excluded Ms. Freman from involvement; rebuffed her attempts to be involved except when he was obligated to involve her; and misled Ms. Freman about the full extent of the distribution transaction.

“Regarding the underpayments of tax for [Years Two and Three], we find that this factor weighs in favor of relief and negates Ms.  Freman’s knowledge of Mr. Freman’s inability to pay the amounts due because Mr. Freman assumed and sustained control over all financial matters; Mr. Freman did not give Ms. Freman an opportunity to review the returns at issue and she did not know the amounts due; Mr. Freman was not forthcoming and ‘got angry’ when Ms. Freman tried to inquire about financial matters; and Mr. Freman otherwise excluded Ms. Freman from the finances, saying that he ‘had it handled’.” T. C. Memo. 2023-10, at p. 30. (Footnote omitted, but it says that even though Kari and Rod had joint accounts, Rod’s economic control outweighs any negative effect).

No lavish lifestyle helps Kari, and her spotty tax reporting and paying compliance shows good faith.

Takeaway- Financial control and superior education and employment by nonrequesting spouse tops sketchy proofs of requesting spouse.