- 14 -
involvement with, or knowledge of, the financial affairs of Ms.
Braden’s father prior to the father’s death. After the father’s
death, petitioner knew only that Ms. Braden was entitled to
receive, and did receive, an inheritance. Petitioner’s
involvement with petitioners’ joint financial affairs generally
was limited to depositing his paycheck in a joint account with
Ms. Braden. Ms. Braden paid most of petitioners’ bills and
managed their financial affairs. Ms. Braden, the executrix of
her father’s estate, also handled the financial matters flowing
from her father’s death. Although Ms. Braden certainly was in a
position to know that the distributions came from her father’s
IRA’s, the record does not contain any evidence that she or
anyone else told petitioner that the distributions consisted of
IRA withdrawals and interest income or gave him any reason to
conclude the distributions were taxable.9 There were no lavish
or unusual expenditures following the receipt of the
distributions that were inconsistent with petitioner’s belief
that Ms. Braden had received a nontaxable inheritance from her
father’s estate. Moreover, although petitioner inquired about
9Respondent relies upon our decision in McCoy v.
Commissioner, 57 T.C. 732 (1972), for the proposition that where
both spouses are “innocent” neither spouse is entitled to relief
under former sec. 6013(e). We reject respondent’s argument based
on McCoy. The evidence in this case supports a conclusion that
Ms. Braden, by reason of her position as executrix and
beneficiary of the IRA’s, likely knew or had reason to know that
the accounts from which the distributions were made were IRA’s.
Page: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 NextLast modified: May 25, 2011