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Petitioner and Mr. Tillotson timely filed with the Internal
Revenue Service a joint Form 1040 for taxable year 1998. On
their jointly filed Form 1040, petitioner and Mr. Tillotson
reported: (1) Wage income of $18,052, (2) business income of
$6,059, (3)taxable income of $11,183, (5) self-employment tax of
$856, (6) Federal income tax withheld of $1,741, and (7) an
amount owed of $791. Petitioner and Mr. Tillotson attached a
Schedule C to their jointly filed 1998 Federal income tax return.
On the Schedule C, Mr. Tillotson was identified as the proprietor
of the business, “Contract Installations”. Petitioner and Mr.
Tillotson did not satisfy the underpayment when they filed their
joint 1998 Federal income tax return.
Petitioner and Mr. Tillotson were divorced on November 27,
2000, by a divorce decree entered by the District Court of Hunt
County, Texas. The divorce decree states, in pertinent part:
IT IS ORDERED AND DECREED that DAVID ALLEN TILLOTSON
and WENDY LANETTE TILLOTSON shall be equally responsible for
all federal income tax liabilities of the parties from the
date of marriage through December 31, 1998, and each party
shall timely pay 50 percent of any deficiencies,
assessments, penalties, or interest due thereon and shall
indemnify and hold the other party and his or her property
harmless from 50 percent of such liabilities unless such
additional tax, penalty, and/or interest resulted from a
party’s omission of taxable income or claim of erroneous
deductions. In such case, the portion of the tax, penalty,
and/or interest relating to the omitted income of claims of
erroneous deductions shall be paid by the party who earned
the omitted income or proffered the claim for an erroneous
deduction. The parties agree that nothing contained herein
shall be construed as or is intended as a waiver of any
rights that a party has under the “Innocent Spouse”
provisions of the Internal Revenue Code.
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