- 19 -
already found that she had no reason to know of either the
embezzlement or its omission from their return.
The Commissioner asks us to consider a few other factors,
including the Haltoms’ still being married and whether Linda
would be subject to economic hardship if she were to remain
liable. See Alt, 119 T.C. at 314-315; sec. 301.6343-1(b)(4),
Proced. & Admin. Regs. While the endurance of the marriage is
relevant, we do not think it outweighs her not having a reason to
know of the understatement or her not receiving any significant
benefit from her husband’s embezzlement.
As for economic hardship, the Haltoms’ combined AGI was
$109,000 in 2002. Linda currently earns around $25,000 per year,
with Jerry earning the remainder. At trial, however, Jerry
credibly testified that his commission rate was scheduled to
decrease from three percent to one percent in November 2004.
Since most of Jerry’s income is commission-based, this will have
a major effect on the Haltoms’ total income. As such, we find
Linda would be subject to economic hardship should she be liable,
which supports our overall conclusion that holding her liable
would be inequitable.
This leaves only the income from Dela's Demos. Any
understatement caused by the failure to report that comparatively
tiny income is obviously attributable to Linda, not Jerry; thus,
she cannot be relieved under section 6015(b) from the tax
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011