T.C. Memo. 2003-96



                      UNITED STATES TAX COURT



                  NANCY B. DOYLE, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 9137-01L.             Filed April 3, 2003.



     Steven L. Sablowsky, for petitioner.

     Julia L. Wahl, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     RUWE, Judge:   The petition in this case was filed in

response to a Notice of Determination Concerning Collection

Action(s) Under Section 6320 and/or 6330.    The sole issue for

decision is whether respondent erroneously denied petitioner’s
                                - 2 -

request for relief from joint tax liability pursuant to section

6015(b) or (f).1

                          FINDINGS OF FACT

     Some of the facts have been stipulated and are so found.

The stipulation of facts and the accompanying exhibits are

incorporated herein by this reference.

     At the time the petition was filed, petitioner resided in

Pittsburgh, Pennsylvania.

The Deficiencies and Tax Court Cases

     For the years 1980 through 1983, petitioner and her husband,

Richard E. Doyle (the Doyles), timely filed joint Federal income

tax returns on which they deducted expenses associated with

various tax shelters, including horse breeding and racing tax

shelters.2   Respondent audited the Doyles’ 1980 through 1983 tax

returns and disallowed the claimed tax shelter deductions.

Respondent issued notices of deficiency to the Doyles determining

tax deficiencies and penalties in excess of $100,000.

     The Doyles timely filed petitions with this Court seeking

redetermination of deficiencies for the tax years 1980 through

1983.    The cases, docket Nos. 6518-87 and 9855-88, were tried in




     1
      Except as indicated to the contrary, all section references
are to the Internal Revenue Code as amended.
     2
      For example, on their 1980 return, the Doyles claimed tax
shelter deductions of $69,721 on gross income of $101,053.
                               - 3 -

March 1989, and the Court issued its opinion on July 7, 1992.3

Most of the issues in the cases were resolved adversely to the

Doyles.   The deficiencies ultimately determined and assessed were

as follows:

                 Year                  Deficiency

                 1980                  $31,854.92
                 1981                   35,007.80
                 1982                   25,209.22
                 1983                    4,600.80

Additionally, respondent assessed more than $294,000 of interest

on the deficiencies.

     In 1996, the Doyles filed another petition with this Court,

docket No. 17325-96, seeking redetermination of an additional

deficiency asserted by respondent on their 1983 return.     The sole

issue in that case was whether the statute of limitations barred

the additional assessment.   The parties stipulated to be bound by

the result in a related case, docket No. 8309-96, in which the

Court held that the period of limitations was still open.     See

Doyle v. Commissioner, T.C. Memo. 1997-396, affd. without

published opinion 

 (3d Cir. 1999).      Accordingly, on

January 28, 1998, the Court entered a stipulated decision.4     On




     3
      See Brown v. Commissioner, T.C. Memo. 1992-379, affd.
without published opinion sub nom. Konenkamp v. Commissioner, 

 (3d Cir. 1993).
     4
      This decision was subsequently affirmed. See Doyle v.
Commissioner, T.C. Memo. 1997-396, affd. without published
opinion 

 (3d Cir. 1999).
                              - 4 -

March 27, 1998, respondent assessed $13,750 in additional tax,

penalties, and interest against the Doyles.

Post-Tax-Court-Opinion Financial Transactions

     On September 14, 1992, a deed was recorded transferring real

property owned by the Doyles to their son and his wife for $1.

On September 21, 1992, two checks drawn on the bank account of

“Lavina Maudice or Nancy B. Doyle,”5 PNB account No. 04130419

(the Lavina/petitioner bank account), in the amount of $5,000

were made payable to Bridget Fink and Andrew Fink, petitioner’s

daughter and son-in-law, respectively.   On September 24, 1992, a

check drawn on a Parkvale Savings Bank account, No. 022061410,

held in the names of “Bridget or Andrew Fink”, was made payable

to the Dreyfus Family of Funds in the amount of $10,000.

     On October 30, 1992, a Parkvale Savings Bank account No.

000033816 was opened in the names of “Michele or Denise Doyle”

(Michele/Denise Doyle bank account No. 1).6   The initial deposit

to the account was $2,450 in cash and a $500 check from the

Lavina/petitioner bank account.

     On November 5, 1992, an account at PNC Savings Bank, account

No. 10749779, was opened in the names of “Denise Doyle or Michele

Doyle” (Michele/Denise Doyle bank account No. 2).   The initial




     5
      Lavina Maudice, now deceased, was petitioner’s aunt.
     6
      Michele and Denise Doyle are petitioner’s daughters.
                              - 5 -

deposit was $26,000, $7,000 of which came from a check signed by

petitioner and drawn on the Lavina/petitioner bank account.

     On November 25, 1992, Residential Advisor’s, Inc. check No.

185, made payable to petitioner and her husband in the amount of

$2,966.40, was deposited into the Michele/Denise Doyle bank

account No. 1.

     On February 23, 1993, petitioner and her husband encumbered

their previously lien-free residence with a mortgage.   On March

1, 1993, petitioner and her husband received the mortgage

proceeds in the form of a check for $93,424.03.   On March 3,

1993, petitioner and her husband used the mortgage proceeds to

obtain $10,000 in cash and the following cashier’s checks:7

          Check No.        Amount         Payee

          59205410       $8,180.45      Nancy Doyle
          59205421        8,180.45      Nancy Doyle
          49205355        8,180.45      Richard Doyle
          59205366        8,180.45      Richard Doyle
          59205400        8,180.45      Richard Doyle
          59205388        8,180.45      Richard Doyle
          59205443        8,180.45      Richard Doyle
          59205454        8,180.44      Nancy Doyle
          59205465        8,180.44      Nancy Doyle
          59205476        9,700.00      Nancy Doyle

     The above-listed checks were disposed of as follows:

     (i) Check No. 59205410 was endorsed by petitioner and

deposited on March 29, 1993, into the Michele/Denise Doyle bank

account No. 1;


     7
      The Doyles were charged a $10 transaction fee for each
cashier’s check.
                               - 6 -

     (ii) check No. 59205421 was endorsed by petitioner and her

daughter Bridget Fink, and on March 4, 1993, it was deposited

into Parkvale Savings bank account No. XX-XXXXXXX, held in the

name of her daughter Bridget (Doyle) Fink;

     (iii) on March 4, 1993, check Nos. 49205355, 59205366,

59205400, 59205388, 59205443, and 59205454 were deposited into

the Doyles’ joint checking account at Great American Federal,

account No. 20355384.   Within 2 weeks of the deposit, $39,598.50

from this account was transferred to the Doyles’ children and

$12,598.50 was withdrawn in cash.   Of the $39,598.50, $27,000 was

transferred to the Doyles’ children on the day of deposit and

consisted of three checks for $9,000 each made payable to each of

the following:   Denise, Michele, and Meghan Doyle.   Petitioner

signed all three checks;

     (iv) check No. 59205465 was deposited into the

Lavina/petitioner bank account.   Petitioner then issued check No.

1707 for $8,100 from the Lavina/petitioner bank account to her

daughter-in-law Jill Doyle.   On March 6, 1993, that check was

deposited into Parkvale Savings Bank account No. XX-XXXXXXX held

in the names of “Richard P. Doyle or Jill A. Doyle.”; and

     (v) on March 4, 1993, check No. 59205476 was endorsed by

petitioner and cashed at Great American Federal.

     From May 28 to June 7, 1993, petitioner and her husband took

a vacation to England and Italy which cost approximately $9,000.
                                - 7 -

     On July 28, 1993, Great American Federal checking bank

account No. 20374823 (the Great American Federal checking

account) was opened in the names of petitioner’s daughters,

“Bridget or Meghan Doyle”.    Checks were drawn on this account

from time to time to pay petitioner and her husband’s expenses.8

The bank statements and canceled checks for this account were

mailed to petitioner’s address, where her daughter Meghan Doyle

resided.   Additionally, checks made payable to the Doyles were

deposited into the Great American Federal checking account.9

     On July 30, 1993, the Internal Revenue Service filed notices

of Federal tax liens against the Doyles for the tax liabilities

redetermined by this Court.    Between September 18 and September

25, 1993, petitioner and her husband took a vacation to Italy at

a cost of approximately $11,000.

     On September 23, 1993, petitioner’s husband liquidated an

investment interest in Colonial Properties, Inc.    The proceeds of

the liquidation were received in the form of a check in the

amount of $20,900 dated September 23, 1993, and made payable to


     8
      Petitioner’s husband explained their use of the daughters’
bank accounts at a bankruptcy creditor’s meeting: “We had our
daughter Bridget or Meghan write checks for our living expenses
* * *. Quite honestly the reason for this was because we were
worried about putting money into our account * * * and take the
chance and jeopardizing the IRS attaching that money.”
     9
      On June 10, 1994, petitioner and her husband gave
respondent a collection statement which failed to disclose the
Great American Federal checking account.
                                - 8 -

petitioner’s husband.    On October 7, 1993, this check was

endorsed and deposited into the Michele/Denise Doyle bank account

No. 2.

     On December 23, 1993, petitioner’s husband liquidated an

investment interest in Colonial Properties Services, Inc.      The

liquidation proceeds were received in the form of a check in the

amount of $5,543.88.    On December 30, 1993, this check was

endorsed and deposited into the Michele/Denise Doyle bank account

No. 2.

     On June 10, 1994, petitioner and her husband completed and

signed Form 433-A, Collection Statement for Individuals.      On this

form, the Doyles understated the value of their home; they listed

its value as $90,000 even though in February 1993, they had

obtained a $97,500 mortgage on the property.

     On December 24, 1994, $8,845.73 was deposited into the

Michele/Denise Doyle bank account No. 1, $8,000 of which was cash

and the balance of which consisted of three checks from

Wellington Power Corp., made payable to petitioner, and one check

from Parker & Parsley Partnership Distribution Account, made

payable to petitioner and her husband.    On December 27, 1994,

$8,900 of funds belonging to petitioner and her husband was

deposited into the Michele/Denise Doyle bank account No. 2.
                               - 9 -

The Bankruptcy Case

     On May 5, 1995, petitioner and her husband filed a voluntary

petition for liquidation under chapter 7 of the U.S. Bankruptcy

Code in the U.S. Bankruptcy Court for the Western District of

Pennsylvania (the bankruptcy case).    In the bankruptcy case,

respondent filed a $379,025.90 proof of claim.    On June 17, 1996,

the bankruptcy court granted the Doyles a discharge pursuant to

11 U.S.C. sec. 727.

     In this case, petitioner initially contended that the income

taxes at issue were discharged in the bankruptcy case. Petitioner

conceded before trial that her joint and several income tax

liabilities for the years 1980 through 1983 were excepted from

bankruptcy discharge pursuant to 11 U.S.C. sec. 523(a)(1)(C).

Payment of Tax Deficiencies

     The Doyles have not made any voluntary payments on their

assessed tax liabilities.   During 1994 and 1995, respondent

placed a continuing levy on the wages of petitioner’s husband

which resulted in the receipt of $34,672.71 and $14,132.45,

respectively.   On June 5, 1995, respondent applied a $6,345

overpayment due the Doyles to their 1980 tax liability.    In

addition, respondent retained the following refunds due the

Doyles to offset their assessed tax liabilities:
                              - 10 -

                Year         Refund Claimed and Due

                1995                  $6,044
                1996                     839
                1997                     384
                1998                     924
                1999                     637

     On October 31, 1994, the Doyles submitted an offer in

compromise of their outstanding tax liabilities.   Respondent did

not accept the offer in compromise.

     On September 5, 2000, respondent issued to petitioner his

final Notice of Intent To Levy and Notice of Your Right To a

Hearing.   On October 2, 2000, petitioner sent to respondent Form

8857, Request for Innocent Spouse Relief, and Form 12153, Request

for Collection Due Process Hearing, with respect to the

aforementioned tax liabilities.   On January 23, February 20, and

May 8, 2001, hearings were held with the IRS Appeals Office to

determine the appropriateness of the proposed levy action.   On

June 22, 2001, respondent issued a notice of determination

sustaining the proposed levy action.    Respondent determined that

the tax liabilities were not discharged in the bankruptcy case,

and that petitioner did not qualify for relief from joint and

several liability under section 6015.

Petitioner’s Background Information

     Petitioner has a high school education.   From 1962 until

1983, petitioner was a homemaker and stay-at-home mother.    During

the years at issue, petitioner had no business experience and no
                               - 11 -

earnings.   Petitioner never reviewed the returns at issue before

signing them.    The returns were prepared by the promoter of the

tax shelters.    Petitioner was responsible for paying the family’s

expenses; she wrote the checks for all expenses.    At her

husband’s direction, petitioner wrote the checks for the tax

shelter investments.   Petitioner and her husband are still

married.

                               OPINION

     Pursuant to section 6330, petitioner sought relief from

respondent’s proposed collection action.   Section 6330 allows a

taxpayer to raise appropriate spousal defenses.    Petitioner

contends that respondent improperly denied her relief from joint

and several income tax liability under section 6015(b) or (f).

For the reasons stated infra, we sustain respondent’s

determination.    Our jurisdiction is predicated upon section

6330(d)(1)(A).    See Davis v. Commissioner, 

, 37

(2000); Sego v. Commissioner, 

, 610 (2000); Goza v.

Commissioner, 

, 179 (2000).

Section 6015(b)(1)

     Section 6015(b)(1) states five conjunctive requirements that

a taxpayer must meet to qualify thereunder for relief from joint

tax liability.    Section 6015(b)(1)(C) requires the spouse seeking

relief to show that in signing the return she did not know, and

had no reason to know, that there was an understatement.
                               - 12 -

Petitioner has failed to satisfy this requirement.   Petitioner

was aware of the existence of the tax shelter investments; she

wrote the checks.   See Alt v. Commissioner, 

 (2002);

Jonson v. Commissioner, 

 (2002) (no evidence was

presented that husband concealed or attempted to deceive electing

wife concerning couple’s financial affairs).   There is no

evidence that petitioner was denied access to the documents

concerning the tax shelters.   See Jonson v. Commissioner, supra

at 119 (spouse had access to financial files).   Petitioner has

not alleged that she was misled but only that she relied on her

husband to take care of the returns.    See Hayman v. Commissioner,

, 1262 (2d Cir. 1993) (“Although * * * [the

taxpayer] claims to have signed the returns without reading them,

she nevertheless is charged with constructive knowledge of their

contents.”), affg. T.C. Memo. 1992-228; Price v. Commissioner,

, 965 (9th Cir. 1989) (spouse cannot obtain benefits

by simply turning a blind eye to facts fully disclosed on

return); Levin v. Commissioner, T.C. Memo. 1987-67 (spouse cannot

obtain benefits of innocent spouse protection in deduction case

“by simply turning a blind eye to-–by preferring not to know of-

–facts fully disclosed on a return, of such a large nature as

would reasonably put such spouse on notice that further inquiry

would need to be made”).
                                - 13 -

     Relief-seeking taxpayers must also establish, inter alia,

that “taking into account all the facts and circumstances, it is

inequitable to hold the * * * [electing taxpayer] liable for the

deficiency in tax for such taxable year attributable to such

understatement”.    Sec. 6015(b)(1)(D) (emphasis added).   In

determining the equities, the “Relevant factors include [but are

not limited to] significant benefits received as a result of the

understatements by the spouse claiming relief, [and] any

participation in wrongdoing on the part of the ‘innocent’

spouse”.10   Friedman v. Commissioner, 

, 532 (2d Cir.

1995), affg. in part and revg. in part on another ground T.C.

Memo. 1993-549; see S. Rept. 91-1537, at 3-4 (1970), 1971-1 C.B.

606, 607-608.11    “Whether the failure to report correctly tax

liability results from ‘concealment, overreaching, or any other

wrongdoing’ on the part of the ‘guilty’ spouse is also relevant.”

Hayman v. Commissioner, supra at 1262; see Jonson v.

Commissioner, supra.




     10
      Guidance in determining “whether it would be inequitable
to hold a requesting spouse” liable can also be found in Rev.
Proc. 2000-15, 2000-1 C.B. 447. See sec. 1.6015-2(d), Income Tax
Regs.
     11
      Since sec. 6015(b)(1) is similar to former sec.
6013(e)(1), we may look to cases interpreting former sec.
6013(e)(1) for guidance when analyzing sec. 6015(b)(1). Butler
v. Commissioner, 

, 283 (2000); Rowe v. Commissioner,
T.C. Memo. 2001-325.
                               - 14 -

     One particularly relevant factor “is whether the requesting

spouse significantly benefited, directly or indirectly, from the

understatement.”12   Sec. 1.6015-2(d), Income Tax Regs.   “Normal

support”, however, is not considered a significant benefit.    See

Friedman v. Commissioner, supra at 532; Hayman v. Commissioner,

supra at 1262; Flynn v. Commissioner, 

, 367 (1989).

“‘Unusual support or transfers of property to the spouse would,

however, constitute “benefit” and should be taken into

consideration * * *’ even when the benefit was received ‘several

years after the year in which the omitted item should have been

included in gross income’”.   Estate of Krock v. Commissioner, 

, 679 (1989) (quoting S. Rept. 91-1537, supra at 3,

1971-1 C.B. at 607-608); see Hayman v. Commissioner, supra at

1262.

     We find that petitioner significantly benefited from the

unpaid liability or items giving rise to the deficiency.    See

Rev. Proc. 2000-15, sec. 4.03(2)(c), 2000-1 C.B. 447, 449.    The

Doyles received significant tax refunds as a result of the tax


     12
      The original predecessor of sec. 6015 explicitly required
the consideration of “whether or not the other spouse
significantly benefitted directly or indirectly from the items
omitted from gross income.” See Act of Jan. 12, 1971, Pub. L.
91-679, sec. 1, 84 Stat. 2063. Although such consideration is no
longer an explicit requirement of the statute, nonetheless, it is
still a factor of significance. See Estate of Krock v.
Commissioner, 

, 679 (1989); Purcell v. Commissioner,

, 242 (1986), affd. 

 (6th Cir. 1987); H.
Rept. 98-432 (Part 2), at 1501, 1502 (1984).
                               - 15 -

shelter deductions.13   Petitioner testified that the refund

checks were deposited into the family checking account to “Do the

household things we wanted to do.”      Additionally, the parties’

stipulation that petitioner and her husband enjoyed two vacation

trips to Europe immediately after this Court’s decision that the

couple owed significant amounts of Federal income tax weighs

heavily against her.

     In determining the equity of the sought-after relief, we

also find it significant that petitioner and her husband tried to

thwart respondent’s collection activities.      The record

demonstrates that after this Court sustained respondent’s

deficiency determinations, petitioner and her family engaged in a

systematic plan to put their assets beyond the reach of

respondent’s legitimate collection activities.      Petitioner and

her husband encumbered their personal residence, which they had

previously owned lien free.   The proceeds of the mortgage were

immediately converted into cash and cash equivalents and spread

among petitioner’s children by deposit into freshly opened bank

accounts in the children’s names.    Petitioner and her husband

liquidated investments and transferred the funds to their

children.   The children used transferred funds to pay their



     13
      By their very nature, the erroneous deductions provided
the Doyles with more disposable income than they otherwise would
have had. For example, the Doyles “sheltered” approximately 69
percent of their 1980 income.
                                - 16 -

parents’ expenses.    Petitioner and her husband took two trips to

Europe at a cost of approximately $20,000.      Petitioner and her

husband transferred real property to their son for $1.

Considering the above, there can be no question that petitioner

materially participated in this plan to make herself and her

husband “collection proof”.    It is elementary, of course, that

one seeking equity must do equity.       Given the facts of this case,

it is not inequitable to deny petitioner relief from joint income

tax liability.

Equitable Relief-–Section 6015(f)

       Alternatively, petitioner asks us to hold that respondent

abused his discretion in denying her equitable relief pursuant to

section 6015(f).     See Cheshire v. Commissioner, 

, 198

(2000), affd. 

 (5th Cir. 2002); Butler v.

Commissioner, 

, 292 (2000).       Since section 6015(f) is

similar to section 6015(b)(1)(D) and the equitable factors

considered are the same, we hold that respondent did not abuse

his discretion by denying petitioner’s request for relief under

section 6015(f).     See Alt v. Commissioner, 119 T.C. at 316;

Barranco v. Commissioner, T.C. Memo. 2003-18.

Conclusion

       Respondent did not err in denying petitioner relief from

joint and several income tax liability under section 6015(b) or

(f).    We hold that respondent correctly determined that
                             - 17 -

collection by levy should proceed.    Accordingly, we shall enter a

decision upholding respondent’s proposed collection action.

     To reflect the foregoing,


                                          Decision will be entered

                                     for respondent.