Betty J. Shackelford - Page 8

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          1103 (9th Cir. 1978); Powers v. Fox, 158 Cal. Rptr. 92, 95 (Ct.             
          App. 1979); Interinsurance Exch. of the Auto. Club v. Velji, 118            
          Cal. Rptr. 596, 600 (Ct. App. 1975).                                        
               In the present case, petitioner filed her petition for an              
          annulment of a voidable marriage only 2 months prior to the trial           
          of this case.  Up until that time, she held herself out as being            
          married.  We do not think that petitioner's current attempt to              
          claim that she was single during 1989, as a result of the                   
          Judgment of Nullity, promotes the purposes for which the                    
          relation-back doctrine was intended.  Accordingly, we hold that             
          the Judgment of Nullity in the present case does not relate back            
          to the date of the marriage and, therefore, is not binding on the           
          Commissioner for purposes of petitioner's Federal income tax                
          filing status.3                                                             

          Understatement of Gross Receipts                                            

               Petitioner determined her Schedule C gross receipts based              
          upon deposits into her business bank account.  Respondent                   
          increased petitioner's gross receipts by $14,658 in the notice of           
          deficiency.  Petitioner concedes she understated her gross                  

          3Respondent also argues that petitioner's securing of an                    
          uncontested annulment constituted a "sham transaction" designed             
          to manipulate her marital status for Federal tax purposes and,              
          thus, should not be given effect.  Respondent points to the                 
          timing of the petition for nullity of marriage, which was shortly           
          after respondent informed petitioner by letter that she intended            
          to raise petitioner's marital status as an issue, as support for            
          this contention.  However, as a result of our holding, we see no            
          reason to look behind the State court's judgment.                           



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