Guy Nathaniel Gay, Jr., Petitioner and Kimberly S. Gibson, Intervenor - Page 11

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          neither respondent nor intervenor assert that intervenor lacks              
          the ability to fulfill her legal obligation.                                
               Contrary to respondent’s determination, we find that the               
          above factors favoring equitable relief clearly outweigh the fact           
          that petitioner had actual knowledge of the unreported income.              
          Under the circumstances of this case, we find that it was an                
          abuse of discretion for respondent to deny petitioner relief from           
          liability for the deficiency and penalty pursuant to section                
          6015(f).                                                                    
               Reviewed and adopted as the report of the Small Tax Case               
          Division.                                                                   
               To reflect the foregoing,                                              
                                             Decision will be entered                 
                                        for petitioner.                               






















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