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on the return.” The notice of determination is erroneous because
petitioner did not sign the 2001 return. In addition, petitioner
was not aware that any tax was due until she filed individual tax
returns for later years. Furthermore, Mr. Bracy handled all tax
matters for the couple and did not inform petitioner of financial
matters. Thus, petitioner did not know, or have reason to know,
of the 2001 underpayment.
Respondent concluded that the underpayment was not solely
attributable to Mr. Bracy. While both petitioner and Mr. Bracy
earned wages during 2001, the notice of determination notes that
“She had income of $25,623 but only had withholding of $1,552.”
In fact, petitioner earned wages of only $15,363 and had $1,114
of Federal income tax withheld. In addition, the notice of
determination failed to take into account a $10,800 distribution
from Mr. Bracy’s IRA. Again, the notice of determination
misstates the facts. Respondent correctly concluded, however,
that payment of the outstanding liability relating to 2001 would
not create an economic hardship for petitioner and that
petitioner’s failure to file her 2003 income tax return in a
timely manner demonstrated a lack of good faith in complying with
Federal income tax laws.
Respondent repeatedly misstated facts and failed to properly
weigh evidence in making his determination. His determination
did not have a sound basis in fact. On balance, the factors
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Last modified: November 10, 2007