PURSUANT TO INTERNAL REVENUE CODE
SECTION 7463(b),THIS OPINION MAY NOT
BE TREATED AS PRECEDENT FOR ANY
Unless otherwise noted, section references are to the
Internal Revenue Code of 1986, as amended, in effect for the
relevant period. Rule references are to the Tax Court Rules of
Practice and Procedure.
T.C. Summary Opinion 2009-75
UNITED STATES TAX COURT
LILLIAN DOREEN VILLELA-WILCOX, Petitioner, AND
DAVID J. WILCOX, Intervenor v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 11479-07S. Filed May 13, 2009.
Lillian Doreen Villela-Wilcox, pro se.
David J. Wilcox, pro se.
Daniel W. Layton, for respondent.
CARLUZZO, Special Trial Judge: This case was heard
pursuant to the provisions of section 7463.
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1 Pursuant to section 7463(b), the decision to be entered is not reviewable by any
other court, and this opinion shall not be cited as precedent for
any other case.
In a final notice of determination dated April 12, 2007,
respondent denied petitioner’s claim for section 6015 relief with
respect to her joint and several liability arising from the 2000
joint Federal income tax return she filed with intervenor (the
return). According to that notice, relief was denied because
petitioner “knew, or had reason to know, of the income or
deductions that caused the additional tax”. In a timely petition
filed May 22, 2007, petitioner challenges respondent’s
determination. Respondent now concedes petitioner’s entitlement
to relief under section 6015(c). Intervenor is opposed to
allowing petitioner any relief under section 6015. Petitioner’s
entitlement to section 6015 relief depends, in large part, upon
what she “knew” or had “reason to know” at the time she signed
the return, and we focus our attention on those points.
Some of the facts have been stipulated and are so found. At
the time the petition was filed, petitioner resided in
California, and intervenor resided in Colorado.
Petitioner and intervenor were married February 14, 1997.
Several months later, in September, intervenor, in his own name
and with financing through a mortgage, purchased a house (the
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marital residence). Apparently petitioner’s credit rating at the
time precluded her participation in the acquisition of the
marital residence. Nevertheless, by quitclaim deed executed by
intervenor after he acquired his interest in the marital
residence, she was made a joint tenant.
Petitioner and intervenor separated in 2002 and were
divorced in 2006. During the course of their marriage they filed
joint Federal income tax returns for the years 1997 through 2001.
The 1997 Joint Federal Income Tax Return
Events that occurred during 1997 are relevant to the relief
petitioner seeks. During 1997 petitioner and intervenor attended
what was promoted as a “financial planning seminar” in Montego
Bay, Jamaica, conducted by Anderson Ark & Associates (Anderson
Ark). In fact the purpose and scope of the seminar was to market
interests in partnerships designed to reduce a partner’s income
tax liability through illegitimate means. Intervenor bought into
a newly formed general partnership called GALEED Management,
which was organized and domiciled in Grand Turk, Turks and Caicos
Islands (GALEED). Although not technically a partner in GALEED,
petitioner was designated its “agent”.
Petitioner and intervenor’s 1997 joint Federal income tax
return (the 1997 return) was prepared by an affiliate of Anderson
Ark and mailed to them. Both of them reviewed and signed it.
The 1997 return includes a Schedule E, Supplemental Income and
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Loss, showing a substantial loss attributable to GALEED. The
loss eliminated what would otherwise have been their Federal
income tax liability for that year (excluding the Schedule E
loss, the 1997 return shows over $200,000 in income) and resulted
in a $42,536 income tax refund, a portion of which was used to
make a cash purchase of a new Cadillac.
The 2000 Federal Income Tax Return
During 2000 intervenor purchased an interest in Forth
Venture, L.L.C. (Venture), another entity promoted by Anderson
Ark. Intervenor’s decision to acquire that interest was prompted
by a comparison of two “mock” 2000 joint Federal income tax
returns, each prepared by an affiliate of Anderson Ark. One
return projected a $29,421 joint income tax liability of
petitioner and intervenor if the purchase was not made, and the
other projected an income tax refund of $28,800, if the
partnership interest was acquired. The cost of the partnership
interest was $21,000.
In order to finance intervenor’s purchase of an interest in
Venture, the marital residence had to be refinanced. The
refinancing was made more complicated because petitioner,
although shown to be a joint tenant on the quitclaim deed
executed years before, was not liable on the note secured by the
original mortgage. Consequently, in a prearranged series of
events, petitioner reconveyed her interest in the marital
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residence to intervenor, intervenor refinanced the marital
residence in his own name, and, once again by quitclaim deed,
petitioner’s joint tenancy in the martial residence was restored.
Petitioner recalls the series of events described above in
connection with the refinancing of the marital residence but
conveniently claims to have no recollection of the reasons for
As it turned out and as with 1997, the return was prepared
by an affiliate of Anderson Ark and includes a Schedule E. That
schedule shows a $356,250 loss attributable to Venture. As a
result the return shows no taxable income (excluding the Schedule
E loss, the return shows over $160,000 in income), no income tax
liability, a $28,800 overpayment of income tax, and a refund
claim for that amount. By the time the return was filed,
however, respondent apparently was on to Anderson Ark promotions,
and there is some question in the record whether petitioner and
intervenor ever received the refund.
Respondent’s Examination of Venture for 2000
As a result of an examination conducted in accordance with
the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA),
Pub. L. 97-248, 96 Stat. 324, administrative adjustments were
made to Venture’s 2000 return. Following Venture’s examination
petitioner and intervenor, each received a Notice of Final
Partnership Administrative Adjustment (FPAA), one issued on May
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16, 2005, and the other on June 20, 2005. Neither petitioner nor
intervenor filed a petition in this Court with respect to the
FPAAs. The administrative adjustments made to Venture caused a
computational adjustment (increase) to petitioner and
intervenor’s 2000 joint Federal income tax liability of more than
$75,000 for 2000, and in due course, that increase was assessed.
The Notice of Deficiency for 2000
On May 22, 2006, after the dust from the TEFRA procedures
settled, petitioner and intervenor were issued what is commonly
referred to as an affected items notice of deficiency for 2000.
In that notice respondent imposed a $6,190 section 6662(a)
accuracy-related penalty computed with reference to the
additional tax liability assessed as a result of the disallowance
of the Venture loss deduction claimed on the return. Neither
petitioner nor intervenor filed a petition with this Court
challenging the imposition of that penalty, and that penalty,
along with related amounts, was assessed in due course.
Petitioner’s Request for Section 6015 Relief
In a Form 8857, Request for Innocent Spouse Relief, received
by respondent on October 1, 2006, petitioner requested relief
from the portion of her 2000 joint Federal income tax liability
that remained unpaid as of that date. In a final notice of
determination, dated April 12, 2007, respondent determined that
she was not entitled to the relief requested.
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As noted, respondent now concedes that petitioner is
entitled to relief under section 6015(c). Respondent and
petitioner have proceeded as though respondent’s concession
renders moot petitioner’s request for relief under section
6015(b) and (f), and we do likewise, focusing our attention
solely on petitioner’s entitlement to relief under section
In general, spouses who elect to file a joint Federal income
tax return for the taxable year are jointly and severally liable
for the entire amount of tax reported on the return, as well as
for the liability for any deficiency subsequently determined,
even if all of the income giving rise to the tax liability is
allocable to only one of them. Sec. 6013(d)(3); Butler v.
Commissioner, 114 T.C. 276, 282 (2000). “Section 6015, however,
provides various means by which a spouse can be relieved of this
joint and several obligation.” Alt v. Commissioner, 119 T.C.
306, 311 (2002), affd. 101 Fed. Appx. 34 (6th Cir. 2004).
One means is provided in section 6015(c). Upon election of
its application by the taxpayer, that section limits a spouse’s
liability for a deficiency to the portion of the deficiency
properly allocable to that spouse under section 6015(d). In
general, an item that gives rise to a deficiency on a joint
Federal income tax return will be allocated to the individuals
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who file the joint return in the same manner as that item would
have been allocated had those individuals filed separate returns.
Sec. 6015(d)(3)(A). As noted, respondent now concedes
petitioner’s entitlement to relief under section 6015(c); this
concession presumably contemplates a section 6015(d) allocation
satisfactory to both of them. Separate and apart from any such
allocation, intervenor challenges petitioner’s entitlement to
section 6015(c) relief.
According to intervenor, petitioner knew about the item
giving rise to the 2000 deficiency, that is, the deduction for
the loss from Venture, and that knowledge disqualifies her from
section 6015(c) relief. The evidence overwhelmingly would
support a finding that petitioner had “reason to know” about the
understatement of tax shown on the return. See, e.g., Price v.
Commissioner, 887 F.2d 959 (9th Cir. 1989); King v. Commissioner,
116 T.C. 198, 204 (2001); Wiener v. Commissioner, T.C. Memo.
2008-230; Levin v. Commissioner, T.C. Memo. 1987-67. But a
requesting spouse’s “reason to know” of the item is not
sufficient to deny relief under section 6015(c). If, as here,
all of the other requirements of that section have been
satisfied, then, as relevant here, relief is denied to the
requesting spouse only if the Commissioner “demonstrates that
* * * [the requesting spouse] had actual knowledge, at the time
such individual signed the return, of any item giving rise to a
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2The existence of the settlement agreement between
petitioner and respondent has appropriately been called to the
Court’s attention. The specific terms and conditions of the
agreement between them, appropriately, has not. See Fed. R.
deficiency”. Sec. 6015(c)(3)(C); Charlton v. Commissioner, 114
T.C. 333, 341 (2000); Martin v. Commissioner, T.C. Memo. 2000-
346. Normally, the “burden of proof” on the point rests with the
Commissioner. Here, it would seem that respondent’s burden has
been rendered moot by respondent’s concession.2 The question to
be addressed, then, is what becomes of the evidence of
petitioner’s “actual” knowledge offered by intervenor.
Although the situation seldom occurs in this Court, we
recognize that the burden of proof placed on one party can be
satisfied by evidence offered by that party’s adversary.
See e.g., Bogk v. Gassert, 149 U.S. 17, 23 (1893) (“It not
infrequently happens that the defendant himself, by his own
evidence, supplies the missing link.”); United States v. Brown,
53 F.3d 312, 314 (11th Cir. 1995) (“[A] defendant who chooses to
present a defense runs a substantial risk of bolstering the
Government’s case.”); United States v. Ortiz-Rengifo, 832 F.2d
722, 726 (2d Cir. 1987) (“[W]e may look to the defendant’s own
evidence to determine so fundamental a matter as whether there
was proof of all the elements of the crime charged.”). Under
appropriate circumstances, we would not be reluctant to deny
section 6015(c) relief to a requesting spouse if evidence offered
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by an intervenor, rather than the Commissioner, demonstrated that
such relief was unavailable because of the requesting spouse’s
“actual knowledge” of “the item giving rise to the deficiency”.
Other than matters stipulated, which do not in and of
themselves satisfy the burden contemplated by section
6015(c)(3)(C), respondent offered no evidence at trial.
Petitioner and intervenor each testified on his or her own
behalf, and numerous documents were introduced into evidence on
intervenor’s behalf. On balance, we find intervenor to be the
more credible witness. Intervenor’s evidence shows petitioner’s
connection and involvement with intervenor’s participation in
Anderson Ark promotions over the years, including the year in
issue. As it relates to petitioner’s “actual” knowledge,
intervenor’s evidence is persuasive, but it is not so compelling
to require that the settlement between respondent and petitioner
After careful review of all of the evidence we find that
petitioner is entitled to relief under section 6015, but only
pursuant to section 6015(c), and only as agreed between her and
To give effect to that agreement, and to otherwise reflect
Decision will be entered
under Rule 155.