Elsie R. Garza - Page 15

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          deficiencies.8  Petitioner’s actual knowledge is a strong factor            
          weighing against relief, which can be overcome only if the                  
          factors in favor of equitable relief are particularly compelling.           
               Petitioner contended at trial that she would experience                
          economic hardship if she were forced to pay the tax liabilities             
          for the years at issue.  A taxpayer might experience economic               
          hardship if he or she is unable to pay basic reasonable living              
          expenses.  Sec. 301.6343-1(b)(4)(i), Proced. & Admin. Regs.  It             
          is the taxpayer’s burden to show both that the expenses qualify             
          and that they are reasonable.  Monsour v. Commissioner, T.C.                
          Memo. 2004-190.  Despite her assertion that paying the tax                  
          liabilities would cause her to experience economic hardship,                
          petitioner provided no evidence at trial that she would be unable           
          to pay basic living expenses if she were held liable for the                
          deficiencies.  As noted earlier, petitioner was and remains                 
          gainfully employed.  The Court fails to see, and petitioner has             
          not established, that she would suffer economic hardship if her             
          request for relief were denied.  This factor weighs against                 
          granting relief to petitioner.                                              
               On the basis of the facts and circumstances in this case,              
          including the factors set forth in Rev. Proc. 2003-61, supra, the           

               8Rev. Proc. 2003-61, sec. 4.03(2)(a)(iii)(c), provides                 
          factors to consider in determining whether the requesting spouse            
          had reason to know of the item giving rise to the deficiency.               
          Because the Court is convinced that petitioner had actual                   
          knowledge of the omitted items of income, consideration of these            
          factors is superfluous.                                                     

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