T.C. Memo. 2017-184



                   UNITED STATES TAX COURT



  CLARK J. GEBMAN AND REBECCA GEBMAN, Petitioners v.
   COMMISSIONER OF INTERNAL REVENUE, Respondent



Docket No. 15941-12.                          Filed September 18, 2017.



        Ps made joint returns of income for the four years in issue. R
determined deficiencies in tax and penalties for all years. Ps assigned
error. In the morning of the day on which this case was called for
trial, Ps met with volunteer counsel. At the recall of the case for trial
that afternoon, P-H conceded all adjustments and penalties and P-W,
represented at trial by volunteer counsel, moved to continue the case
to give P-W time to file a motion for leave to amend petition to raise
an innocent spouse defense. We granted the motion to continue.
Subsequently, P-H moved to withdraw his concession, and P-W
moved for leave to amend the petition. We issued an order to show
cause why, among other things, volunteer counsel, appearing in this
case as a representative of P-W, whose interests appeared materially
adverse to those of P-H, did not have a conflict of interest. Volunteer
counsel responded, stating, among other things, that the interests of
P-W and P-H were not materially adverse but that P-H would not sign
a waiver consenting to volunteer counsel's representation of P-W.
                                          -2-

[*2]           Held: Volunteer counsel is now representing P-W in a matter
       in which, previously, he represented P-H, whose interests are
       materially adverse to those of P-W, without having obtained P-H's
       informed consent in writing. See Model Rules of Prof'l Conduct
       r. 1.9 (Am. Bar Ass'n 2016).

              Held, further, to obviate a conflict of interest, volunteer counsel
       must either withdraw as P-W's counsel or take other steps to obviate
       that conflict. See Rule 24(g).



       Clark J. Gebman, pro se.

       Frank Agostino and Eugene Kirman, for petitioner Rebecca Gebman.

       Alex Shlivko, for respondent.



                            MEMORANDUM OPINION


       HALPERN, Judge: We decide in this report that attorney Frank Agostino's

representation of petitioner wife (Mrs. Gebman) presents a conflict of interest that

requires that he either withdraw as her counsel or take other steps to obviate that

conflict. Unless otherwise indicated, all section references are to the Internal

Revenue Code of 1986, as amended, all Rule references are to the Tax Court Rules

of Practice and Procedure, and all Model Rule references are to the Model Rules

of Professional Conduct (Model Rules) (Am. Bar Ass'n 2016).
                                          -3-

[*3]                                 Background

       This case is before the Court to redetermine deficiencies in, and accuracy-

related penalties with respect to, petitioners' Federal income tax liabilities for their

2007 through 2010 taxable (calendar) years. Respondent's principal adjustments

giving rise to the deficiencies are (1) adjustments disallowing substantial (on

average, in excess of $1 million) deductions for net operating loss carryovers

(NOLs) to each year and (2) an adjustment increasing petitioners' 2007 gross

income on account of distributions during that year totaling $210,423 from

numerous individual retirement accounts (IRAs) owned by Mrs. Gebman.

Petitioners assign error to respondent's determination, making a "general denial on

all findings". Respondent denies any error.

Calendar Call

       We set this case for trial at the trial session of the Court beginning at 10 a.m.

on Monday, January 30, 2017 (sometimes, just January 30), in Room 206, Jacob

K. Javits Federal Building, 26 Federal Plaza, New York, N.Y. Petitioners did not

appear when we first called the case from the calendar, but petitioner husband

(Mr. Gebman) did appear later that morning, unaccompanied by Mrs. Gebman,

and we recalled the case. Mr. Gebman explained that Mrs. Gebman was parking

the car. Mr. Gebman moved for us to continue the case, a motion we denied. We
                                          -4-

[*4] set the case for trial at 1 p.m. that afternoon. Earlier, at the beginning of the

trial session, we had announced the presence in the courtroom of volunteer

lawyers participating in the New York County Lawyers' Association (NYCLA)

Pro Bono Calendar Call Program. We offered Mr. Gebman the opportunity to

speak with a volunteer lawyer, and Mr. Agostino, a participant in the calendar call

program, introduced himself to Mr. Gebman. Mr. Gebman agreed to meet with

Mr. Agostino but stated that he wanted Mrs. Gebman to attend the meeting (she

had not yet appeared). Shortly thereafter, Messrs. Gebman and Agostino left the

courtroom together.

      We recalled the case at 1 p.m., at which time Mr. Gebman again introduced

himself, and Mr. Agostino stated that he would be entering an appearance for Mrs.

Gebman. We asked whether there was anything preliminary to discuss. Mr.

Agostino stated: "Yes. Your Honor. With respect to Clark Gebman, Mr. Gebman

will be conceding the deficiency in full." We inquired: "Are you representing

him?" Mr. Agostino said that Mr. Gebman would get up. Mr. Gebman arose and

said: "I would do as John was saying." We assume that he meant "Frank" (i.e.,

Mr. Agostino), and Mr. Agostino agrees. We then asked: "Okay. So a concession

to the deficiency in full by petitioner husband?" Mr. Agostino replied: "Yes."

Respondent's counsel then asked about the penalty, and Mr. Agostino added:
                                        -5-

[*5] "And penalty." We inquired of Mr. Gebman as to the penalty. He responded:

"I'm going to do what's best for my family, your Honor. And I've been counseled

that I've made a mistake, and I need to be accountable to the Government. And I

am fully prepared to, whatever I can within my means to do so." He agreed to

concede the penalty.

      Discussion then turned to Mrs. Gebman, whom Mr. Agostino said wished to

raise an innocent spouse defense. He recognized that Mrs. Gebman required leave

of the Court to amend the petition in order to raise the defense. Following

additional discussion, the Court agreed to continue the case to give Mrs. Gebman

time to move for leave to amend the petition to raise an innocent spouse defense.

Mr. Agostino represented that Mrs. Gebman would stipulate the correctness of all

of respondent's adjustments and penalties, relying only on the innocent spouse

defense that she hoped to raise. The Court asked Mr. Gebman whether he agreed

to that, and he responded that he did. By order dated January 30, we continued the

case and gave Mrs. Gebman until March 1, 2017, to move for leave to amend

petition. On January 30, we filed Mr. Agostino's appearance on behalf of Mrs.

Gebman.
                                         -6-

[*6] Mr. Gebman's Motions

      On March 1, 2017, we filed as Mr. Gebman's motion to be relieved of

concession a document that he had styled: Motion to Rescind Plea of Settlement.

We denied the motion. On April 18, 2017, we filed Mr. Gebman's Motion to

Reconsider: The Motion To Be Relieved of Concession (motion to reconsider).

Together, those documents total 50 pages and contain much rambling, extraneous

matter presented to show the injustice Mr. Gebman is claiming to be fighting.

Nevertheless, they do evidence his either continuing (or revived) belief that

petitioners have grounds for their assignments of error, particularly with respect to

the NOLs (to wit, "NOL carry forward based on hybrid Casualty Loss") and the

omitted IRA distributions from Mrs. Gebman's accounts (to wit, "use of retirement

funds being of the genre of permissible withdrawal without penalty"). He asks to

be relieved of his concession because he feels that he was misinformed by counsel,

who led him to make the concession. He also states: "[I] was under the

impression I would be represented by Counsel when I left the room and returned

without Counsel at my side and this was not my choice".

Mrs. Gebman's Motion

      On March 1, 2017, we filed Mrs. Gebman's motion for leave to file an

amended petition (motion for leave), declaration in support thereof (declaration),
                                           -7-

[*7] and memorandum in support of the motion for leave (memorandum). We

lodged her amended petition and ordered respondent to respond to the motion for

leave.

         On April 3, 2017, we filed respondent's objection to the motion for leave, in

which, among other objections, he argued that, on the basis of the allegations in

her lodged amended complaint, Mrs. Gebman was unlikely to prevail on the merits

of her innocent spouse claim.

Telephone Conference

         On April 28, 2017, we held a telephone conference with the parties to

discuss Mrs. Gebman's motion for leave and Mr. Gebman's motion to reconsider.

With respect to the motion for leave, we expressed our concern, as respondent had

in his objection, that Mrs. Gebman had not by either the motion for leave or the

declaration, or in the lodged amended petition, averred facts that would justify

relief under section 6015 (i.e., so-called innocent spouse relief). The discussion

focused on the 2007 distributions from Mrs. Gebman's numerous IRAs, which she

does not deny. Mr. Agostino spoke for Mrs. Gebman and argued, on the authority

of Roberts v. Commissioner, 

(2013), a case not cited in the

memorandum, that the distributions should not be includible in her separately

calculated gross income but, instead, should be includible in Mr. Gebman's
                                         -8-

[*8] separately calculated gross income because he had wrongfully converted the

distributions to his own use. That, Mr. Agostino argued, would provide Mrs.

Gebman the grounds for innocent spouse relief. Mr. Gebman asked us to grant the

motion to reconsider. We said that we would consider the motions and ended the

telephone conference.

Joint Return Liability; Practitioners' Ethical Responsibilities

      Before we continue our narrative, it will be helpful if we set forth some of

the law governing joint return liability and also describe some of the ethical

responsibilities of practitioners appearing before the Court.

      In general, if a husband and a wife make a joint return of income, the tax is

computed on the aggregate income and the liability for tax is joint and several.

See sec. 6013(d)(3). Section 6015 provides relief from the joint and several

liability imposed by section 6013(d)(3) in three situations, only two of which

appear to have any application here with respect to protecting Mrs. Gebman from

the tax liability attaching to the unreported distributions from her IRAs. To

qualify for relief under section 6015(b)(1), she would have to show, among other

things, that the resulting understatement of income was attributable to an

erroneous item of Mr. Gebman's. See sec. 6015(b)(1)(B). To qualify for equitable

relief under section 6015(f), she would likely have to show that Mr. Gebman's
                                           -9-

[*9] fraud was responsible for the erroneous item. See Rev. Proc. 2013-34, sec.

4.01(7)(e), 2013-43 I.R.B. 397, 400. Mrs. Gebman's necessary averments that

either the unreported IRA distributions were an erroneous item of Mr. Gebman's

or he fraudulently converted the IRAs are inconsistent with, and appear adverse to,

at least his present position that respondent erred in including the IRA

distributions in petitioners' gross income.1

      The ethical responsibilities of practitioners are addressed in two places in

our Rules. Rule 24(g) addresses in part the duty of a counsel of record

representing more than one person with differing interests. Rule 201(a) provides

that practitioners before the Court shall carry on their practice in accordance with

the letter and spirit of the Model Rules. Mr. Agostino is counsel of record for

Mrs. Gebman only. Nevertheless, even if Mr. Gebman had never formed a client-

lawyer relationship with Mr. Agostino, and Mr. Gebman was no more than a

prospective client of his, Mr. Agostino would owe him certain duties under Model

Rule 1.18, Duties to Prospective Client.


      1
       As to Mr. Gebman's prior position, on January 30 Mr. Gebman stated to the
Court that he wished to concede the deficiency in full and the penalties and he did
not object to Mrs. Gebman's motion for leave. The motion for leave, however, put
Mr. Gebman in jeopardy that, if we granted the motion for leave and Mrs. Gebman
succeeded in her innocent spouse defense, respondent would look only to him and
his assets to collect any unpaid liability, a result financially adverse to him.
                                         -10-

[*10] Order To Show Cause

      On May 5, 2017, in the light of our concern about Mr. and Mrs. Gebman's

differing interests, we served on Mr. Agostino an order to show cause in writing

why he had not violated Model Rule 1.18 and should not be relieved of

representing Mrs. Gebman. We propounded numerous questions. Mr. Agostino

promptly responded to the order. We set forth selected responses.

      He acted as both an adviser and an evaluator to Mr. Gebman, which,

referencing the Model Rules, he defines to mean that he provided Mr. Gebman

with an informed understanding of his rights and obligations and explained the

practical implications of his actions. Indeed, with respect to petitioners'

assignments of error, he told Mr. Gebman during their January 30 meeting that

petitioners' assignments were frivolous (i.e., in Mr. Agostino's words: "not well

grounded in fact or warranted by existing law or a good faith argument for the

extension, modification, or reversal of existing law"). See Goff v. Commissioner,

, 237 (2010) (similarly defining "frivolous"); Model Rule 3.1

(similar). He told Mr. Gebman that prosecution of his claims could "(a) result in

the imposition of sanctions pursuant to IRC sec. 6673; and (b) have collateral

consequences to Mrs. Gebman." He also told him that he would not represent him

in challenging the notice of deficiency or in asking the Court to reconsider its
                                         -11-

[*11] denial of his request for a continuance. He did, however, offer "to represent

Mr. Gebman, and/or supervise the representation of Mr. Gebman, with respect to

the prosecution of the post-assessment collection alternatives available to him

under IRC sec. 6330" ("Notice and Opportunity for Hearing Before Levy."). He

states that, shortly before recall of the case, "Mr. Gebman told me that he would

concede the deficiencies in tax and the penalties after I refused to enter an

appearance on his behalf."

      With respect to Mrs. Gebman, Mr. Agostino states that he acted as both an

advocate and negotiator, which, again referencing the Model Rules, he defines to

mean that he zealously asserted her position and sought a result advantageous to

her. He decided that, to zealously assert her interests, it was necessary for him to

enter an appearance in the case.

      We asked Mr. Agostino: "Did you after recall of the case at 1:00 P.M. on

January 30, 2017, communicate with * * * [Mr. Gebman] again?" Mr. Agostino

responded: "After the calendar call, and out of an abundance of caution, my office

requested that Mr. and Mrs. Gebman execute a conflict waiver that would

memorialize their informed consent to the course of action recommended by me at

the calendar call." Later in his response, Mr. Agostino expands on his answer,

stating that he had requested of Mr. Gebman that he meet with him to, among
                                        -12-

[*12] other things, "execute a pro bono retainer agreement and conflict waiver"

and "discuss Mr. Gebman's right to intervene in Mrs. Gebman's Innocent Spouse

case".2 Mr. Agostino did meet with Mr. Gebman (but not with Mrs. Gebman) on

February 10, 2017, in his office, in New Jersey. Mr. Gebman communicated to

Mr. Agostino, among other things, the procedural history of the case, his objection

to the Court's refusal on January 30 not to continue the case, and his mental state

following that ruling. At the conclusion of the meeting, when asked to sign a

conflict waiver prepared by Mr. Agostino, Mr. Gebman refused. He told Mr.

Agostino that, while he supported Mrs. Gebman's innocent spouse defense, he was

unwilling to sign the waiver. He said that he felt that he did not want to concede

his case. He also told Mr. Agostino that his services would no longer be needed.

      Mr. Agostino specifically addresses the question of whether Mrs. Gebman's

interests in this case are materially adverse to Mr. Gebman's interests. He

advances two reasons Mrs. Gebman's interests are not materially adverse to Mr.

Gebman's. First, "both Mr. and Mrs. Gebman contend that Mrs. Gebman is

      2
        Mr. Agostino's reference to an innocent spouse case is unclear. During the
recall of this case at 1 p.m. on January 30, Mr. Agostino informed the Court:
"Petitioner wife has an innocent spouse case, innocent spouse claim, pending with
the Internal Revenue Service that, I believe, has not been acted upon yet." Mr.
Agostino may have been referring to that administrative proceeding, or he may
have been referring to this case, were we to give Mrs. Gebman leave to raise an
innocent spouse defense.
                                        -13-

[*13] entitled to the relief set forth by IRC sec. 6015." His second reason is that

he believes that Mr. Gebman would suffer no financial detriment should Mrs.

Gebman succeed in her innocent spouse defense, notwithstanding that respondent

as a result would look only to Mr. Gebman to pay the lion's share of the resulting

tax liability:

       [A]ccording to Mrs. Gebman and Respondent's filings, Mr. Gebman
       has not had a paying job since 2007. Public record searches suggest
       that he has no assets from which to collect any of the deficiencies
       here at issue. Even if he became the target of Respondent's collection
       action, the most likely outcome is Respondent's classification of his
       account as "currently not collectible".

That justification appears to agree with Mr. Gebman's claim in his motion to be

relieved of concession that, during their January 30 meeting, he was counseled to

concede and accept an innocent spouse defense for Mrs. Gebman: "Lead Counsel

[we assume, Mr. Agostino] * * * suggested in two years declare Bankruptcy and it

will be over".

       Notwithstanding Mr. Gebman's unwillingness to sign the waiver prepared

by Mr. Agostino, Mr. Agostino claims that, from Mr. Gebman's filings (his motion

to be relieved of concession and the motion to reconsider), the Court "can infer

that Mr. Gebman knows that the undersigned is assisting Mrs. Gebman in
                                         -14-

[*14] prosecuting her Innocent Spouse Claim and that he consents to * * * [Mr.

Agostino's] actions on Mrs. Gebman's behalf."

                                     Discussion

I.    Introduction

      It is well known that counsel may face a conflict of interest when a joint

return is filed, a controversy arises, and both spouses speak with the attorney about

the matter. As described in the American Bar Association publication Effectively

Representing Your Client Before the IRS, ch. 2, app. D (Am. Bar Ass'n, 6th ed.

2015): "It must be recognized from the outset of representation that each spouse is

a separate client even if, for example, a joint return is involved." Moreover: "[I]f

one spouse needs to assert the innocent spouse defense, a waivable conflict

arises." 

said in Dorchester Indus. Inc. v. Commissioner, 

,

339 (1997), aff'd, 

(3d Cir. 2000): "Certainly, one spouse's claim that

she (he) is an innocent spouse can present a conflict of interest to counsel trying to

represent both spouses."

      On January 30, 2017, Mr. Gebman sought assistance from Mr. Agostino, a

volunteer lawyer assisting unrepresented persons as part of the NYCLA Pro Bono

Calendar Call Program. And while, initially, Mr. Gebman may have been only a

prospective client of Mr. Agostino's, during their interview a client-lawyer
                                        -15-

[*15] relationship was established. Mr. Agostino informed Mr. Gebman of his

rights and explained the implications of his actions (i.e., Mr. Agostino's opinion

that Mr. Gebman's claims were frivolous and, if he persisted, he could attract a

sanction that would have collateral consequences to his wife). It is of no moment

to the question of whether a client-lawyer relationship resulted that Mr. Agostino

may have been volunteering his services to Mr. Gebman on what he expected to be

a short-term basis. Model Rule 6.5 addresses nonprofit and court-annexed limited

legal services programs. Model Rule 6.5 cmt. [1] makes clear that, with respect to

such programs, notwithstanding that there is no expectation of continuing

representation, "a client-lawyer relationship is established." Mr. Agostino's client-

lawyer relationship with Mr. Gebman began on January 30, and, we assume, lasted

until February 10, 2017, when Mr. Agostino invited Mr. Gebman to his office to

execute a pro bono retainer agreement and a conflict waiver and to discuss Mr.

Gebman's right to intervene in Mrs. Gebman's innocent spouse case. Mr. Gebman

told Mr. Agostino that he no longer needed his services. Mr. Agostino established

a client-lawyer relationship with Mrs. Gebman on January 30, which continues

still.
                                         -16-

[*16] II.    Ethical Rules

      Rule 24(g) is entitled "Conflict of Interest". In pertinent part it provides:

      If any counsel of record * * * represents more than one person with
      differing interests with respect to any issue in a case, * * * then such
      counsel must either secure the informed consent of the client * * *;
      withdraw from the case; or take whatever other steps are necessary to
      obviate a conflict of interest or other violation of the ABA Model
      Rules of Professional Conduct, and particularly rules 1.7, 1.8, and 3.7
      thereof. * * *

The Rule further provides that we may inquire into the circumstances of counsel's

employment in order to deter such a violation. As stated supra p. 9, Rule 201(a)

provides that practitioners before the Court shall carry on their practice in

accordance with the letter and spirit of the Model Rules. We have the power to

compel withdrawal of a taxpayer's counsel if his or her representation would

violate the Model Rules. See Rule 24(g); Para Techs. Tr. v. Commissioner, T.C.

Memo. 1992-575, 

, at *3.

      Model Rule 1.7 is entitled "Conflict of Interest: Current Clients". It

prohibits a lawyer from representing a client if the representation involves a

current conflict of interest. A representation involves a concurrent conflict of

interest if "the representation of one client will be directly adverse to another

client". Model Rule 1.7(a)(1). Under certain conditions, including obtaining
                                          -17-

[*17] informed written consent from both clients, a lawyer may represent a client

notwithstanding a current conflict of interest. See Model Rule 1.7(b)(4).3

      Model Rule 1.9 is entitled "Duties to Former Clients". In pertinent part, it

provides:

             (a) A lawyer who has formerly represented a client in a matter
      shall not thereafter represent another person in the same or a
      substantially related matter in which that person's interests are
      materially adverse to the interests of the former client unless the
      former client gives informed consent, confirmed in writing.

      Model Rule 1.18 is entitled "Duties to Prospective Clients". It addresses the

duties of a lawyer to a person who consults with the lawyer about the possibility of


      3
          Model Rule 1.7(b) provides in full:

             (b) Notwithstanding the existence of a concurrent conflict of
      interest under paragraph (a), a lawyer may represent a client if:

                      (1) the lawyer reasonably believes that the lawyer
               will be able to provide competent and diligent
               representation to each affected client;

                     (2) the representation is not prohibited by law;

                      (3) the representation does not involve the
               assertion of a claim by one client against another client
               represented by the lawyer in the same litigation or other
               proceeding before a tribunal; and

                     (4) each affected client gives informed consent,
               confirmed in writing.
                                          -18-

[*18] forming a client-lawyer relationship. If the prospective client does not

become a client, the lawyer, in general, may not represent a new client "with

interests materially adverse to those of a prospective client in the same or

substantially related matter if the lawyer received information from the

prospective client that could be substantially harmful to the person in the matter."

the lawyer has received disqualifying information,

representation is permissible, however, if, among other possibilities, "both the

affected client and the prospective client have given informed consent, confirmed

in writing". 

  Discussion

       A.    Introduction

       "Loyalty and independent judgment are essential elements in the lawyer's

relationship to a client." Model Rule 1.7 cmt. [1]. The competing interests of

clients (or of a client and a former client or of a client and a prospective client)

may place the lawyer's duties to one client in conflict with his duties to another.

See 

to a former client: "The underlying question is whether the

lawyer was so involved in the matter that the subsequent representation can be

justly regarded as a changing of sides." Model Rule 1.9 cmt. [2]. In some

circumstances a client (or a former or a prospective client) can consent to the
                                        -19-

[*19] lawyer's representing another person whose interests conflict with those of

the client (or former or prospective client). See, e.g., Rule 24(g); Model Rules

1.7(b), 1.9(b)(2), 1.18(d)(1). Some conflicts, however, are not consentable. See,

e.g., Model Rule 1.7 cmt. [17] ("when the clients are aligned directly against each

other in the same litigation"). If the conflict is consentable, then, under the Model

Rules, the lawyer may continue to represent a person conflicted in interest with

another client (or former or prospective client) if, among other things, he secures

informed written consent of both clients, in the case of concurrent clients, see

Model Rule 1.7(b)(4), the former client, see Model Rule 1.9(a), or both the former

prospective client and the affected client, see Model Rule 1.18(d)(1). Rule 24(g)

allows a lawyer to represent persons with differing interests with respect to any

issue in a case if he secures the informed consent of the client. In Harbin v.

Commissioner, 

, 99 (2011), we held that Rule 24(g) requires "informed

written consent". (Emphasis added.)

      While Mr. Gebman and, indeed, Mrs. Gebman may for a short time on

January 30 have been no more than prospective clients of Mr. Agostino, beginning

at some time on January 30 and ending on February 10, 2017, both Mr. and Mrs.

Gebman enjoyed a client-lawyer relationship with Mr. Agostino. Any conflict of

interest during that period would be governed by Rule 24(g) and Model Rule 1.7.
                                          -20-

[*20] Mr. Gebman is now a former client of Mr. Agostino's, which implicates

Model Rule 1.9. Because he is a former client, we will limit our consideration to

the application of Rule 24(g) and Model Rule 1.9. As discussed, Rule 24(g)

addresses counsel of record representing two or more persons with differing

interests with respect to any issue in a case and, in lieu of withdrawing from the

case, requires such counsel to secure the informed written consent of the client or

take whatever steps are necessary to obviate a conflict of interest. The rule is

somewhat ambiguous with respect to the situation before us, because Mr.

Agostino is not, nor was he ever, counsel of record in this case for Mr. Gebman,

nor is Mr. Gebman now a client of his. Model Rule 1.9 seems a better fit, and,

indeed, Rule 24(g) contemplates compliance with the Model Rules to obviate a

conflict of interest.

       While Mr. Agostino was not counsel of record for Mr. Gebman, he formerly

represented Mr. Gebman in connection with the tax dispute before us. As used in

the Model Rules, the verb "represent" is a term of art. The preamble to the Model

Rules, in discussing a lawyer's responsibilities, describes a lawyer, as among other

things, "a representative of clients" and further states that, "[a]s a representative

* * * a lawyer performs various functions", including, among others, "advisor",

"advocate", "negotiator", and "evaluator". Model Rules, preamble, r. 1.8(a) cmts.
                                        -21-

[*21] [1] and [2]. Mr. Agostino concedes that he acted both as an adviser and as

an evaluator to Mr. Gebman and as an advocate and negotiator to Mrs. Gebman.

We now consider whether Mr. Agostino is representing Mrs. Gebman in the same,

or substantially the same, matter as that in which he represented Mr. Gebman,

whether Mrs. Gebman's interests in the matter are materially adverse to Mr.

Gebman's interests, and (since we find that her interests are materially adverse to

his interests) whether Mr. Agostino obtained from Mr. Gebman informed consent

in writing. Because the elements necessary to find a breach of duty to a former

client under Model Rule 1.9 (identity or similarity of matter, material adversity,

and lack of informed consent in writing) are the same as elements necessary to

find a breach of duty to a prospective client under Model Rule 1.18, we have not

asked Mr. Agostino to again address those elements for purpose of determining his

duty to Mr. Gebman under Model Rule 1.9.

      B.     The Same or Substantially the Same Matter

      Model Rule 1.9 cmt. [2] states in part: "The scope of a 'matter' for purposes

of this Rule depends on the facts of a particular situation or transaction. * * * The

underlying question is whether the lawyer was so involved in the matter that the

subsequent representation can be justly regarded as a changing of sides in the
                                          -22-

[*22] matter in question." Model Rule 1.9 cmt. [3] states in part: "Matters are

'substantially related' * * * if they involve the same transaction or legal dispute".

      Petitioners jointly petitioned for redetermination of the deficiencies in tax

and penalties, assigning error to all of respondent's adjustments and penalties. As

framed by the notice of deficiency and the petition, the legal dispute before us is

whether respondent may assess against petitioners some or all of the deficiencies

and penalties that he determined. Mrs. Gebman has agreed to concede that the

adjustments and penalties are correct, but she would like to be relieved of liability

for the tax and penalties with respect to at least the IRA distributions on the

grounds that, with respect to the resulting tax liabilities and penalties, she is an

innocent spouse, or, to put it another way, that omission of the IRA distributions

from petitioners' joint income was an erroneous item of Mr. Gebman's or that he

fraudulently converted the IRA distributions to his own use and should have

reported the resulting income. Facts concerning the IRAs are central to her

innocent spouse defense. Mr. Gebman may dispute the facts as Mrs. Gebman

construes them, or he may construe them differently. In any event, his defense of

their joint return position and her innocent spouse claim involve the same

transactions (IRA distributions) and a dispute as to their tax consequences. Mr.

Gebman's intent to defend their return position (if allowed to) puts Mr. Agostino
                                         -23-

[*23] (in representing Mrs. Gebman) on the other side from Mr. Gebman (he says

that the IRA distributions were not includible in their gross income, she would

concede that they were, and, moreover, she wants to claim that it was his (and not

her) income). The matter in which Mr. Agostino now represents Mrs. Gebman is

the same, or at least substantially the same, matter in which he formerly

represented Mr. Gebman.

      C.     Adversity of Interests

      Harbin is an unusual case involving a taxpayer's claim for relief from joint

and several liability made two years after the taxpayer and his former wife

(intervenor) had in a prior Tax Court proceeding conceded the deficiencies and

penalties from which the taxpayer was claiming relief. Respondent opposed the

taxpayer's claim for relief on the ground that he should have raised it in the prior

proceeding. We held that the taxpayer was not barred from seeking relief because

he had not participated meaningfully in the prior proceeding. See sec. 6015(g)(2).

We found that he had participated in the prior proceeding through counsel

representing both him and the intervenor, and his "opportunity to raise a claim for

relief from joint and several liability * * * was obscured and obstructed by * * *

[his attorney's] concurrent representation of * * * [the taxpayer] and intervenor,

whose interests were adverse." Harbin v. Commissioner, 

. We said
                                         -24-

[*24] that the attorney's joint representation of the taxpayer and the intervenor

"involved an actual conflict of interest" because the taxpayer "had a viable claim

for relief from joint and several liability under section 6015(b) with respect to the

deficiencies at issue * * * [and his] claim was directly adverse to the interest of

intervenor, who was contesting the deficiencies at issue." 

that

the taxpayer's claim for relief from joint and several liability under section 6015(b)

was adverse to the intervenor's interest in contesting the deficiencies at issue

because it required the taxpayer to prove that the deficiencies were attributable to

"erroneous items" of the intervenor. 

positions are reversed

here from those of the taxpayer and the intervenor in Harbin because Mr. Gebman

is making no claim that he is an innocent spouse; but the point to be drawn from

Harbin is that, if Mr. Gebman is contesting the deficiencies at issue, Mrs.

Gebman's claim for innocent spouse relief is directly adverse to his interest in

contesting the deficiencies. And while Mr. Gebman may have told Mr. Agostino

at their February 10, 2017, meeting that he supported Mrs. Gebman's innocent

spouse defense, he refused at the meeting to sign the proffered waiver and said

that he did not want to concede the case. That decision became certain, and

known to Mr. Agostino, on March 1, 2017, when Mr. Gebman filed the motion for

leave. Whatever Mr. Gebman may believe with respect to his wife's innocent
                                         -25-

[*25] spouse defense, so long as he challenges respondent's adjustment including

in petitioners' 2007 gross income the distributions from Mrs. Gebman's IRAs, her

defense is adverse to his challenge.

      Mr. Agostino has not distinguished Harbin. Perhaps that is because he

believes that, notwithstanding that Mrs. Gebman may succeed in her innocent

spouse defense, Mr. and Mrs. Gebman are not on that account economically

adverse because Mr. Gebman is, in effect, judgment proof and would suffer no

financial detriment should Mrs. Gebman succeed in that defense. As we report

supra p. 13, Mr. Agostino believes: "[A]ccording to Mrs. Gebman and

Respondent's filings, Mr. Gebman has not had a paying job since 2007. Public

record searches suggest that he has no assets from which to collect any of the

deficiencies here at issue."

      The financial interests of a spouse not relieved from joint and several

liability are normally adverse to the financial interests of the spouse so relieved

because, as we pointed out supra note 1, the Commissioner could look only to the

first spouse to collect the tax from which the second spouse was relieved. Mr.

Agostino does not address the fact that during the normal 10-year collection

period applicable to unpaid taxes, see sec. 6502(a), Mr. Gebman's fortunes may

change. Mr. and Mrs. Gebman's interests are therefore not only adverse because
                                        -26-

[*26] Mr. Gebman wishes to contest the liability from which Mrs. Gebman seeks

relief but also because her success in seeking that relief would be financially

adverse to him. Those are both disabilities that might well have been cured had

Mr. Gebman signed the waiver proferred by Mr. Agostino, which Mr. Gebman

refused to do.

       We conclude and find that Mr. and Mrs. Gebman's interests are materially

adverse within the meaning of Model Rule 1.9 and Mr. Agostino has a conflict of

interest.

       D.    Informed Consent

       Mrs. Gebman's interests are materially adverse to Mr. Gebman's interests in

the same matter, and, to represent Mrs. Gebman, Mr. Agostino must obtain from

Mr. Gebman informed consent in writing. See Model Rule 1.9(a). He has not

done so. The need for him to obtain such consent from Mr. Gebman was apparent

no later than February 10, 2017, when Mr. Gebman refused to sign the waiver

prepared by Mr. Agostino, terminated Mr. Agostino's services, and told him that

he did not want to concede his case.4


       4
       We do not address the application of Rule 24(g) and Model Rule 1.7 to the
period beginning on January 30, when Mrs. Gebman decided to pursue an
innocent spouse defense, and ending on February 10, 2017, when Mr. Agostino no
longer represented both Gebmans.
                                          -27-

[*27] IV.    Conclusion

      As stated, Mr. Agostino has a conflict of interest. To obviate that conflict,

he must either withdraw as Mrs. Gebman's counsel or take other steps to obviate

that conflict. See Rule 24(g). If he does not obviate the conflict within 10 days of

this report, we will order him removed as Mrs. Gebman's counsel.

      We will grant the motion to reconsider and, further, we will relieve Mr.

Gebman of his concession, allowing him to proceed with challenging the

deficiencies and penalties in question.


                                                 An appropriate order will be issued.