MEMORANDUM OPINION

WELLS, Judge: Respondent determined that petitioner was not entitled to equitable relief pursuant to section 6015(f) for petitioner's 1994, 1995, 1996, 1997, 1998, and 1999 tax years. ¹ The issue to be decided is whether respondent's denial of petitioner's request for equitable relief pursuant to section 6015(f) was an abuse of discretion.

The parties have submitted the instant case fully stipulated, without trial, pursuant to Rule 122. The parties' stipulations of fact are incorporated herein by reference and are found as facts in the instant case.

At the time of filing her petition, petitioner resided in Atlanta, Georgia.

During the years in issue, petitioner was married to James George. Both petitioner and Mr. 2004 Tax Ct. Memo LEXIS 275">*276 George held master's degrees. Petitioner was employed as a school teacher, and Mr. George was employed by Georgia Power Company. In addition to his regular employment, Mr. George entered a business venture in 1998 to build and sell single-family homes.

Petitioner and Mr. George failed to timely file income tax returns for 1994, 1995, 1996, 1997, and 1998. Mr. George, however, periodically told petitioner that he had timely filed the tax returns for those years and had paid the related tax liabilities, and respondent concedes that petitioner believed Mr. George had done so.

Mr. George died in October of 1999, and petitioner was appointed to represent Mr. George's estate. While assembling financial records of the estate, petitioner discovered that tax returns for 1994 through 1998 had not been filed. Therefore, petitioner hired an accountant to prepare such returns. Joint returns for 1994, 1995, 1996, and 1997 were signed by petitioner on March 14, 2000, and received by respondent on March 21, 2000, and a joint return for 1998 was signed by petitioner on March 14, 2000, and received by respondent on March 20, 2000. The accountant also prepared a joint return for 1999, which petitioner2004 Tax Ct. Memo LEXIS 275">*277 timely filed. The foregoing joint tax returns, collectively referred to as the returns, showed the following amounts due for the respective years:

Tax Year                 Tax Liability

__________                ______________

1994                     $ 8,119

1995                      7,862

1996                      10,037

1997                     n.1 4,447

1998                      19,488

1999                      3,740

n.1 Respondent subsequently corrected a math error and

increased the balance due for 1997 to $ 4,873.

No portion of the amounts shown as due on the returns was paid at the time of filing.

Respondent assessed petitioner's Federal income taxes based on the returns. The sum of tax, penalties, and interest assessed against petitioner for the years in issue exceeds $ 115,000.

Respondent received from petitioner a Form 8857, Request for Innocent Spouse Relief, 2004 Tax Ct. Memo LEXIS 275">*278 and respondent denied that claim for relief. Subsequently, respondent denied a request for reconsideration of respondent's prior decision and forwarded the request to respondent's Appeals Office. Respondent's Appeals Office issued petitioner a Notice of Determination Concerning Request for Relief Under the Equitable Relief Provisions of Section 6015(f), again denying the requested relief.

We must decide whether respondent's denial of petitioner's request for equitable relief pursuant to section 6015(f) was an abuse of discretion. Under limited circumstances, a spouse may qualify for relief from joint and several liability pursuant to section 6015.

In the instant case, petitioner reported the tax due but failed to make timely payment. Petitioner's tax liability, therefore, arises from neither an understatement nor a deficiency. Based on the foregoing, petitioner concedes that relief is unavailable under either section 6015(b) or (c).

Section 6015(f) authorizes the Secretary to relieve taxpayers of joint and several liability where holding the taxpayer liable would be inequitable and relief is unavailable under subsections (b) and (c):

Sec. 6015(f). Equitable relief. --

Under procedures2004 Tax Ct. Memo LEXIS 275">*279 prescribed by the Secretary, if --

   (1) taking into account all the facts and circumstances, it is

   inequitable to hold the individual liable for any unpaid tax or

   any deficiency * * * and

   (2) relief is not available to such individual under subsection

   (b) or (c), the Secretary may relieve such individual of such

   liability.

Pursuant to the discretionary authority granted in section 6015(f), respondent has prescribed procedures, set forth in 2000-1 C.B. 447, 2000-5 I.R.B. 447, Rev. Proc. 2000-15, 2000-1 C.B. 447, 2000-5 I.R.B. 447, Rev. Proc. 2000-15, for determining whether a spouse qualifies for equitable relief from joint and several liability. We have previously applied Rev. Proc. 2000-15, supra, in considering equitable relief requests pursuant to section 6015(f). See, e.g., Jonson v. Comm'r, 118 T.C. 106">118 T.C. 106, 118 T.C. 106">125-126 (2002), affd. 353 F.3d 1181">353 F.3d 1181 (10th Cir. 2003). The record demonstrates that respondent applied Rev. Proc. 2000-15, supra, to evaluate petitioner's application for equitable relief in the instant case.

We review respondent's denial of petitioner's claim for equitable relief pursuant to section 6015(f) for abuse of discretion.2004 Tax Ct. Memo LEXIS 275">*280 Butler v. Commissioner, 114 T.C. 276">114 T.C. 276, 114 T.C. 276">291-292 (2000). Consequently, we decide in the instant case whether respondent acted arbitrarily, capriciously, or without sound basis in fact in denying the requested relief. 118 T.C. 106">Jonson v. Commissioner, supra at 125. Petitioner bears the burden of proof as to whether respondent's denial of such relief was an abuse of discretion. See Rule 142(a). We are not limited to matters contained in respondent's administrative record when deciding the issue. Ewing v. Comm'r, 122 T.C. 32">122 T.C. 32, 122 T.C. 32">35-44 (2004).

Rev. Proc. 2000-15, sec. 4.01, 2000-1 C.B. at 448, sets forth seven threshold conditions ² that must be satisfied before the Secretary will consider any request for equitable relief pursuant to section 6015(f). In the instant case, respondent concedes that petitioner satisfied the seven threshold conditions.

2004 Tax Ct. Memo LEXIS 275">*281 Rev. Proc. 2000-15, sec. 4.02, 2000-1 C.B. at 448, provides that equitable relief will ordinarily be granted if the seven threshold conditions and each of the following three elements (collectively referred to hereinafter as the three elements) are satisfied:

  (a) At the time relief is requested, the requesting spouse is no

   longer married to, or is legally separated from, the



   nonrequesting spouse, or has not been a member of the same



   household as the nonrequesting spouse at any time during the



   12-month period ending on the date relief was requested [the



   first element];



   (b) At the time the return was signed, the requesting spouse had



   no knowledge or reason to know that the tax would not be paid.



   The requesting spouse must establish that it was reasonable for



   the requesting spouse to believe that the nonrequesting spouse



   would pay the reported liability. If a requesting spouse would



   otherwise qualify for relief under this section, except for the



   fact that the requesting spouse had no knowledge or reason to

   know of only a portion of the unpaid2004 Tax Ct. Memo LEXIS 275">*282 liability, then the

   requesting spouse may be granted relief only to the extent that



   the liability is attributable to such portion [the second



   element]; and



   (c) The requesting spouse will suffer economic hardship if



   relief is not granted. For purposes of this section, the



   determination of whether a requesting spouse will suffer



   economic hardship will be made by the Commissioner or the



   Commissioner's delegate, and will be based on rules similar to

   those provided in section 301.6343-1(b)(4) of the Regulations on

   Procedure and Administration [the third element].

Respondent concedes that petitioner satisfied the first element because Mr. George was deceased at the time petitioner requested relief. The parties, however, dispute whether petitioner satisfied the second and third elements.

The second element is satisfied if the requesting spouse did not know or have reason to know when the requesting spouse signed the returns that the taxes would not be paid. Accordingly, petitioner must establish that it was reasonable for her to believe that Mr. George would pay the reported liability.

Petitioner contends2004 Tax Ct. Memo LEXIS 275">*283 that she did not know or have reason to know when she signed the returns in 2000 that the taxes would not be paid because she believed that Mr. George had settled the tax liability prior to his death. Petitioner further contends that she believed that, even if Mr. George did not make the tax payments as he had claimed, losses related to Mr. George's business venture of building and selling single-family homes might have offset any taxable income. Because Mr. George's records were incomplete, petitioner contends that she had no way of knowing the extent of any such losses.

Although petitioner signed the tax returns in 2000 with each return showing an amount due, petitioner cites Wiest v. Comm'r, T.C. Memo. 2003-91, in support of the proposition that a taxpayer's signature on a tax return submitted without payment does not constitute constructive knowledge by such taxpayer of an underpayment. Petitioner contends that she did not review the returns before signing them and that her signature merely illustrates her knowledge that the returns needed to be filed as soon as possible, as instructed by her accountant.

Petitioner's contention is without merit. Petitioner2004 Tax Ct. Memo LEXIS 275">*284 had reason to know at the time she signed the returns in 2000 that taxes were due. By signing the joint returns, petitioner is charged with constructive knowledge of the amounts shown on the returns as tax due. Castle v. Comm'r, T.C. Memo. 2002-142. Failure to review the returns prior to signing does not relieve petitioner of responsibility for the stated liability. See id.

Additionally, petitioner knew or had reason to know that the tax liabilities reported in 2000 on her tax returns would not be paid. In that regard, petitioner's reliance on Wiest v. Commissioner, supra, is misplaced. In Wiest, we held that the spouse requesting relief could reasonably have expected the nonrequesting spouse to pay the tax liability where the nonrequesting spouse had already assumed responsibility for preparing and filing the return. In the instant case, however, after discovering that the returns for 1994 through 1998 had not been filed, petitioner did not rely on her spouse to either prepare or file the joint returns. On the contrary, petitioner had access to the couple's records and directed the preparation of the joint returns prior to her signing them. Because2004 Tax Ct. Memo LEXIS 275">*285 Mr. George was deceased at the time petitioner signed the returns in 2000, petitioner at that time could not have relied on her spouse to pay the liability. Furthermore, as the personal representative of Mr. George's estate, petitioner had reason to know that the liability had not been paid by the estate of Mr. George.

After petitioner already had learned that Mr. George's statements to her with regard to his filing the returns were false, petitioner could not have reasonably relied on statements made by Mr. George that he had paid the tax liabilities. Petitioner had significant education and access to the couple's financial records. Additionally, petitioner could have but apparently did not inquire with respondent as to whether Mr. George had in fact made estimated tax payments.

Based on the foregoing, we believe that petitioner knew or had reason to know that the liability would not be paid.

The third element is satisfied if the requesting spouse will suffer economic hardship if relief is not granted. The Secretary is directed to base the determination of whether a requesting spouse will suffer economic hardship on rules similar to those provided in section 301.6343-1(b)(4), 2004 Tax Ct. Memo LEXIS 275">*286 Proced. & Admin. Regs. ³

2004 Tax Ct. Memo LEXIS 275">*287 Petitioner contends that she will suffer economic hardship if she is not granted relief pursuant to section 6015(f). Respondent received from petitioner a questionnaire, Form 886-A, in which petitioner reported that she was employed as a teacher, with an annual salary of approximately $ 48,000. ⁴ Petitioner also reported on Form 886-A approximately $ 1,000 of annual income from dividends and interest. ⁵ Petitioner reported her current monthly income on her Form 886-A as $ 3,500 and her current monthly expenses as $ 3,775. Petitioner's stated monthly expenses included the following:

Monthly Expenses

_________________________________________________________________

Mortgage payments                    $ 1,250

Utilities                          375

Food                            400

Clothing                          150

Vehicle                           250

Entertainment                        200

Insurance2004 Tax Ct. Memo LEXIS 275">*288                          150

Charity                           500

Gifts, travel, miscellaneous                500

__________________________________________________________________

Total                           3,775

2004 Tax Ct. Memo LEXIS 275">*289 Petitioner notes that her situation has changed in several respects since she submitted the Form 886-A. Petitioner is no longer employed. ⁶ In lieu of the annual salary reported on the Form 886-A, petitioner has received a monthly pension of $ 2,000 since her retirement. Petitioner also states that she paid off a second mortgage on her home.

On June 3, 2003, petitioner provided respondent with documentation regarding her assets. Petitioner disclosed to respondent a net worth of $ 315,000, including a $ 25,000 checking account, a $ 250,000 IRA, and $ 45,000 of equity in her home. Petitioner contends that full payment of the tax liabilities would require a distribution of approximately $ 210,000 from her IRA account, leaving a balance of approximately $ 100,000.

We conclude that satisfaction of the tax liabilities in issue will not cause petitioner to be unable to pay reasonable basic living expenses. Although2004 Tax Ct. Memo LEXIS 275">*290 petitioner may not be currently employed, she states in her brief that she is considering a return to the workforce to resume her teaching career. ⁷ Petitioner is well educated, and she has posited no reason why she could not be expected to earn income comparable to her 1999 salary of $ 48,572. Also, petitioner's reasonable basic living expenses are significantly less than the $ 3,775 listed on petitioner's Form 886-A. In the absence of more detailed itemization, we do not consider her monthly expenses of $ 200 for entertainment, $ 500 for charity, and $ 500 for gifts and travel to be basic living expenses. Furthermore, petitioner's mortgage payments have presumably been reduced since petitioner paid off the second mortgage on her home.

Even if petitioner were to be unable to resume her employment, we believe that petitioner could liquidate a portion of the IRA inherited from Mr. George in order to pay her tax liabilities without causing her to be unable2004 Tax Ct. Memo LEXIS 275">*291 to pay reasonable basic living expenses. The IRA provides petitioner with a payment source independent of her compensation and retirement pension.

Therefore, we conclude that petitioner would not suffer economic hardship if relief were not granted.

Because petitioner does not satisfy each of the three elements, petitioner does not qualify for relief pursuant to Rev. Proc. 2000-15, sec. 4.02.

Where the seven threshold conditions are satisfied but relief is unavailable because the three elements are not satisfied, the Secretary is authorized to grant relief if it would be inequitable under the facts and circumstances to hold the requesting spouse liable for the unpaid liability (hereinafter, the facts and circumstances test). Rev. Proc. 2000-15, sec. 4.03, 2000-1 C.B. at 448. The facts and circumstances test provides a partial list of positive and negative factors to be taken into account in determining whether to grant relief under section 6015(f).

The facts and circumstances test provides the following positive factors weighing in favor of relief:

  (1) Factors weighing in favor of relief. The factors weighing in

   favor of2004 Tax Ct. Memo LEXIS 275">*292 relief include, but are not limited to, the following:

     (a) Marital status. The requesting spouse is separated

     (whether legally separated or living apart) or divorced



     from the nonrequesting spouse [the marital status positive



     factor].



     (b) Economic hardship. The requesting spouse would suffer

     economic hardship (within the meaning of section 4.02(1)(c)

     of this revenue procedure) if relief from the liability is



     not granted [the economic hardship positive factor].

 (c) Abuse. The requesting spouse was abused by the

     nonrequesting spouse, but such abuse did not amount to

     duress [the abuse positive factor].

     (d) No knowledge or reason to know. In the case of a

     liability that was properly reported but not paid, the

     requesting spouse did not know and had no reason to know

     that the liability would not be paid [the knowledge

     positive factor].

     (e) Nonrequesting spouse's legal obligation. The

   2004 Tax Ct. Memo LEXIS 275">*293   nonrequesting spouse has a legal obligation pursuant to a

     divorce decree or agreement to pay the outstanding

     liability [the nonrequesting spouse's legal obligation

     positive factor].

     (f) Attributable to nonrequesting spouse.

     The liability for which relief is sought is solely

     attributable to the nonrequesting spouse [the liability

     attribution positive factor].

As to the marital status positive factor, petitioner's marital status weighs in favor of relief because Mr. George was deceased at the time petitioner sought equitable relief. The economic hardship positive factor does not weigh in favor of relief. As stated above, we do not believe that petitioner would suffer economic hardship if relief from the tax liabilities were not granted. The abuse positive factor does not weigh in favor of relief. On her Form 886-A, petitioner conceded that marital abuse does not apply.

The knowledge positive factor does not weigh in favor of relief. As stated above, we believe that petitioner knew or had reason to know at the time of filing the tax returns in 2000 that the tax2004 Tax Ct. Memo LEXIS 275">*294 liabilities would not be paid.

The nonrequesting spouse's legal obligation positive factor does not weigh in favor of relief. On her Form 886-A, petitioner stated that neither petitioner nor Mr. George entered into any enforceable agreements related to the payment of the tax liabilities.

The liability attribution positive factor does not weigh in favor of relief. Petitioner concedes that the liability for which relief is sought is not solely attributable to Mr. George.

The facts and circumstances test provides the following negative factors weighing against relief:

  (2) Factors weighing against relief. The factors weighing

   against relief include, but are not limited to, the following:

     (a) Attributable to the requesting spouse. The unpaid

     liability or item giving rise to the deficiency is

     attributable to the requesting spouse [the liability

     attribution negative factor].

     (b) Knowledge, or reason to know. A requesting spouse knew

     or had reason to know of the item giving rise to a

     deficiency or that the reported liability would be unpaid

 2004 Tax Ct. Memo LEXIS 275">*295     at the time the return was signed [the knowledge negative

     factor]. This is an extremely strong factor weighing

     against relief. Nonetheless, when the factors in favor of

     equitable relief are unusually strong, it may be

     appropriate to grant relief under section 6015(f) in limited

     situations where a requesting spouse knew or had reason to

     know that the liability would not be paid, and in very

     limited situations where the requesting spouse knew or had

     reason to know of an item giving rise to a deficiency.

     (c) Significant benefit. The requesting spouse has

     significantly benefitted (beyond normal support) from the



     unpaid liability * * * [the significant benefit negative



     factor].



     (d) Lack of economic hardship. The requesting spouse will



     not experience economic hardship (within the meaning of

     section 4.02(1)(c) of this revenue procedure) if relief

     from the liability is not granted [the lack of economic

    2004 Tax Ct. Memo LEXIS 275">*296  hardship negative factor].

 (e) Noncompliance with federal income laws. The requesting

     spouse has not made a good faith effort to comply with

     federal income tax laws in the tax years following the tax

     year or years to which the request for relief relates [the

     tax law noncompliance negative factor].

     (f) Requesting spouse's legal obligation.

     The requesting spouse has a legal obligation pursuant to a



     divorce decree or agreement to pay the liability [the



     requesting spouse's legal obligation negative factor].

     [Rev. Proc. 2000-15, sec. 4.03.]

Regarding the liability attribution negative factor, petitioner contends that the majority of the unpaid liability is attributable to Mr. George. In a letter to respondent dated July 27, 2001, petitioner's representative stated that the aggregate tax liability for the 6 years at issue should be allocated as follows:

             Mr. George      Petitioner    Combined

______________________________________________________________________

Tax2004 Tax Ct. Memo LEXIS 275">*297            $ 38,819       $ 13,382     $ 52,201

Pen./Int.          30,761        12,127      42,888

_______________________________________________________________________

Total            69,580        25,509      95,089

Petitioner further contends that, if she had filed separate rather than joint returns, her unpaid liability would total only $ 7,500 for the 6 years in question. ⁸ We conclude that petitioner's contention has no merit because petitioner filed joint returns with Mr. George, and we must base our decision on the actual facts of the instant case. Consequently, because a significant portion of the unpaid liability is attributable to petitioner, the liability attribution negative factor weighs against relief.

The knowledge negative factor2004 Tax Ct. Memo LEXIS 275">*298 weighs against relief. As noted above, we believe that petitioner knew or had reason to know that the reported liabilities would be unpaid at the time petitioner signed the returns.

The significant benefit negative factor weighs against relief. "Significant benefit" for purposes of section 6015(b)(1)(D) is defined in section 1.6015-2(d), Income Tax Regs.:

  (d) Inequity. All of the facts and circumstances are considered

   in determining whether it is inequitable to hold a requesting

   spouse jointly and severally liable for an understatement. One

   relevant factor for this purpose is whether the requesting

   spouse significantly benefitted, directly or indirectly, from

   the understatement. A significant benefit is any benefit in

   excess of normal support. Evidence of direct or indirect benefit

   may consist of transfers of property or rights to property,

   including transfers that may be received several years after the

   year of the understatement. Thus, for example, if a requesting

   spouse receives property (including life insurance

   proceeds) from the nonrequesting spouse that is beyond normal

 2004 Tax Ct. Memo LEXIS 275">*299   support and traceable to items omitted from gross income that

   are attributable to the nonrequesting spouse, the requesting

   spouse will be considered to have received significant benefit

   from those items. ⁹ * * *

2004 Tax Ct. Memo LEXIS 275">*300 Petitioner contends that the only benefit she received from the understatement was the estimated $ 750 tax for which she would have been liable if she had filed separate rather than joint tax returns. We, however, do not believe that petitioner's estimated $ 750 annual benefit approximates the actual benefit she received because petitioner filed joint returns. Furthermore, petitioner concedes that she received from Mr. George a pension of $ 250,000 (converted by petitioner into an IRA) and life insurance proceeds of $ 150,000. Petitioner could have used, but did not, these resources to pay the liabilities. Moreover, we note that, had Mr. George paid the joint liabilities during his lifetime, the funds petitioner received from Mr. George at his death would have been reduced by those payments. Consequently, petitioner received a significant benefit beyond normal support.

The lack of economic hardship negative factor weighs against relief. As noted above, we do not believe that petitioner will experience economic hardship if relief is not granted.

T he tax law noncompliance negative factor weighs against relief. The record indicates that petitioner had not filed tax returns for 20002004 Tax Ct. Memo LEXIS 275">*301 or 2001 as of April 20, 2002.

The requesting spouse's legal obligation negative factor does not weigh against relief. As noted above, petitioner did not enter an agreement with Mr. George with regard to payment of the liability.

Taking into account all the facts and circumstances, we conclude that it would not be inequitable to hold petitioner liable for the unpaid liability. Petitioner has not carried her burden to establish that respondent's denial of equitable relief pursuant to section 6015(f) was an abuse of discretion. ¹⁰ We have considered all of petitioner's arguments and contentions which are not discussed herein, and we find them to be without merit or irrelevant.

To reflect the foregoing,

Decision will be entered for respondent.