- 7 - Under Bunney, no portion of Mr. Morris’s IRA distributions are included in petitioner’s gross income.3 Similarly, the section 72(t) additional tax does not apply to petitioner, and applies only to Mr. Morris. 2. Relief Under Section 66(c) We next turn to petitioner’s claim that respondent abused his discretion in refusing to grant equitable relief under section 66(c). Initially, we note that we are only concerned with whether petitioner is entitled to equitable relief under section 66(c) for the year 1996. With regard to 1997, petitioner has no deficiency since no part of the IRA distribution for that year is taxable to her. Under a community property regime, each spouse is entitled to file separate Federal income tax returns. When separate Federal tax returns are filed, each spouse must report half of the community income. United States v. Mitchell, 403 U.S. 190, 196-197 (1971). Under certain limited circumstances, one spouse may be relieved of liability for taxes on that spouse’s share of community income. These circumstances are set forth in section 66(c) as follows: 3 We note that in Bunney v. Commissioner, 114 T.C. 259, 262 (2000), respondent argued that the taxpayer was taxable on the full amount of the distribution because he received the distribution. Under this rationale, it would appear here that petitioner would not be taxable on the distributions since she did not receive any of the distributions.Page: Previous 1 2 3 4 5 6 7 8 9 10 Next
Last modified: May 25, 2011