- 42 - Barrera entered into the marital settlement agreement. At the time petitioner and Mr. Barrera entered into the marital settlement agreement, Mr. Barrera was approximately 1 year into serving his 27-month sentence for conspiring to defraud the United States in connection with his mortgage brokerage business. In the years prior to his conviction on this charge, Mr. Barrera had lost his mortgage broker license, his mortgage brokerage business had failed, and his and petitioner’s reported adjusted gross income had fallen from approximately $199,000 in 1995 to $2,108 in 2001. By the time of his conviction in October 2002 and subsequent incarceration in April 2003, Mr. Barrera was not working and had no income, and petitioner admitted that Mr. Barrera was living with her and the children because “he had no money” and “nowhere to go”. The facts and circumstances of this case thus establish that petitioner knew or had reason to know that, at the time she entered into the marital settlement agreement, Mr. Barrera would not pay the liabilities at issue. Accordingly, this factor is neutral. 6. Attributable to Nonrequesting Spouse The balance due on the joint return for taxable year 1998 was attributable to self-employment tax on income earned by Mr. Barrera from his Schedule C activity as a business consultant. The balance due on the joint return for taxable year 1999 was attributable to the 10-percent additional tax on earlyPage: Previous 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 NextLast modified: November 10, 2007