Joan Phyllis Levy - Page 28

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          agreement.  That agreement was the product of arm’s length                  
          negotiations between petitioner and Levy.  Petitioner and Levy              
          were adversaries, and each was represented by his or her own                
          divorce attorney.  In the dissolution of the marital                        
          relationship, petitioner insisted that Levy agree to be liable              
          exclusively for the tax liabilities.  Although shortly after the            
          divorce on June 13, 2002, Levy filed for and obtained a                     
          bankruptcy discharge from the tax liabilities, at the time the              
          marital settlement agreement was entered, petitioner and her                
          attorney had not anticipated the bankruptcy and discharge of                
          Levy.  Petitioner did not know or have reason to know then that             
          Levy would attempt to avoid paying the tax liabilities by                   
          obtaining a bankruptcy discharge.                                           
               We also disagree with respondent’s contention that                     
          petitioner’s continuance of her efforts to seek innocent spouse             
          relief for 1979 and 1991 through 1999 after the conclusion of the           
          marital settlement agreement somehow establishes that she knew              
          Levy would not honor his obligation under that agreement to pay             
          those tax liabilities.  In continuing to prosecute her claim for            
          innocent spouse relief, petitioner was acting in her own best               
          interest.  As of June 28, 2001, the 1979 and 1991 through 1999              
          tax liabilities were estimated to be more than $718,000.  The               
          marital settlement agreement between petitioner and Levy (under             
          which Levy agreed to be liable exclusively for those tax                    






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