§66 — Treatment of community income

6015(e)(1)(A), Butler was overruled by Porter v.

But they do point us to Revenue Procedure 2000-15, superseded by Revenue Procedure 2003-61 .

6662 (d) (1) (A) . The section 6662 accuracy-related penalty-does not apply where the taxpayer shows that he or she acted in good faith and exercised reasonable cause .

6662(d) (1) (A).. - The section 6662 accuracy-related penalty does not apply where the taxpayer shows that he acted in good faith and with reasonable cause.

Section 66(c) provides a taxpayer with relief .if certain circumstances are satisfied. Petitioner is not eligible for the type of relief provided by section 66(a) or (b) . Section 66(a) does not apply because petitioner and Dr .

Held: Unlike sec. 6015(e), I.R.C., sec. 66, I.R.C.

Accordingly, we need not decide whether petitioner satisfied the exception in section 469(c)(7)(B) which exempts certain rea l estate professionals from the $25,000 li$nitation of section 469(i) .

We hold that petitioners are subject to substantive liability under TUFTA on the basis ofconstructive fraud because they received Snow Hill Road and a liquidating distribution from Holiday Bowl without giving reasonably equivalent value in exchange for the distributions.

We hold that petitioners are subject to substantive liability under TUFTA on the basis ofconstructive fraud because they received Snow Hill Road and a liquidating distribution from Holiday Bowl without giving reasonably equivalent value in exchange for the distributions.

We hold that petitioners are subject to substantive liability under TUFTA on the basis ofconstructive fraud because they received Snow Hill Road and a liquidating distribution from Holiday Bowl without giving reasonably equivalent value in exchange for the distributions.

We hold that petitioners are subject to substantive liability under TUFTA on the basis ofconstructive fraud because they received Snow Hill Road and a liquidating distribution from Holiday Bowl without giving reasonably equivalent value in exchange for the distributions.

We hold that they are liable; (3) whether Dr.

According}y, we hold that petitioner is liable for the section 6651(f) fraudulent failure to file additions to tax.3° VII.

Hawk, Jr., GST Exempt Marital Trust, Nancy Sue Hawk and Regions Bank, cotrustees; and Nancy Sue Í4awk are each liable as transferees for the 2003 Federal income tax liability ofHoliday Bowl, Inc., of$965,358 and penalties pursuant to section 6662 b) and (h) of$8,035 and $370,072, respectively.

Hawk, Jr., GST Exempt Marital Trust, Nancy Sue Hawk and Regions Bank, cotrustees; and Nancy Sue Hawk are each liable as transferees for the 2003 Federal income tax liability ofHoliday Bowl, Inc., of$965,358 and penalties pursuant to section 6662(b) and (h) of$8,035 and $370,072, respectively.

The IRS assessed a trust fund r covery penalty agains petitioner for 2002 pursuant to section 6672.

Therefore, we hold that the 2006 return is not a joint return under.

The Appeals officer determined that petitioner was liable for the TFRPs, sent petitioner a determination letter to that effect, and assessed the TFRPs pursuant to section 6672.

Petitioner filed his 2003 return (i .e ., which was due April 15, 2004) on September 25, 2006, and has failed to establish, pursuant to section 6651(a)(1), that the untimely filing was due to reasonable cause and not willful neglect .

pursuant to section 6673(a)(2)(B) by ordering respondent to pay attorney's -1.1- fees of Kersting project petitioners to investigate and present the evidence of Sims's and McWade's misconduct to the Court .

Consequently, we hold that petitioner is liable for the addition to tax under section 6651(a)(1) , D.

We hold that he does .

Section 66 provides for the treatment of "community income" in community property States when the spouses do not file jointly .

On February 2, 2009, respondent filed a motion for summary judgment seeking a decision that collection can proceed and to impose a penalty pursuant to section 6673 .

Accordingly, we hold that petitioners .

Accuracy-Related Penalty The last issue for decision is whether petitioner is liable for an accuracy-related penalty pursuant to section 6662(a) for the 2002 taxable year .

Respondent contends that petitioner'sposition is frivolous and that, pursuant to section 6673(a)(1), the Court should impose a penalty on petitioner .

66 provides that a taxpayer may be relieved of liability from Federal income tax on community property earned by a spouse.

However, petitioner contends that respondent made no determination in the notice of deficiency to disallow the benefits of community property law pursuant to section 66(b), that respondent's reliance on section 66(b) is a "new matter" within the meaning of Rule 142(a),10 and that respondent must bear the burden of proving that section 66(b) applies.11 When the Commissioner attempts to rely on a basis that is beyond the scope of the original deficiency determinatio

1.6662-2(c), Income Tax Regs. The Commissioner bears the burden ofproduction regarding the taxpayer's liability for any penalty. Sec. 7491(c); see also Higbee v. Commissioner, 116 T.C. at 46-447. Once the Commissioner has met this burden, the taxpayermust provide persuasive evidence that the Commissioner's determination was incorrect. Se Rule 142(a); Higbee v. Commissioner, 116 T.C. at 447. Negligence includes any failure to make a reasonable attemptto comply with the provisions ofthe internal r

16 , 2008 - 11 - penalty .under section 6662(a )-because of a substantial under- statement of-income tax (substantial understatement) under section 6662.(b) (2) for each of those years . Section 6662 (a),imposes an accuracy-.related penalty equal to 20 percent of the underpayment attributable to, .inter alia , substantial understatement under section 66.62(b)(2) . For pur- poses of section 6662.(b)(2),7an understatement is equal to the excess of the amount of tax-required to be shown in the tax

For these reasons, we will grant respondent's motions for summary judgment as to the section 66 .63 penalties .

section 6662 (a) on the same underpayment of tax upon which the Court found petitioner liable for the fraud penalty under section 6663(a) . - 87 - Section 6662 (a) does not apply to any portion of an underpayment subject to the fraud penalty under section 66 6 Sec . 6662(b) . When a joint return is filed and one spouse 4s 1 found liable for the fraud penalty, imposing the accuracy-r~late d penalty on the other spouse with respect to the same underpaymen t would result in impermissible stacking .

Wright is found not to be liable for the civil fraud penalty pursuant to section 66 .63 on any portion of the underpayment for any of the years in issue, petitioners are liable for the accuracy-related penalty, pursuant to section 6662, on such portion of the underpayment .

ence of the taxpayer, and the reliance on the advice of a professional, such as an acco ntant . Sec . 1 .6664-4(b)(1), Income Tax Regs . Respondent has the burden of production under section 7491(c) wi h respect to the accuracy-related penalty under section 66 2 . To meet that burden, respondent must come forward with suffi ient evidence indicating that it is appropriate to impose than penalty . Higbee v . Commissioner , 116 T .C . 438, 44 6 (2001) . Although respondent bears the burden of produ

Statutory Relief Under Section 66 Having concluded that petitioner’s share of community income is $45,713, we consider the application of section 66. Under certain circumstances, section 66 provides that a taxpayer may be relieved of liability on community income. Section 66(a) addresses the treatment of community income in the case of spouses who live apart. Section 66(b) allows the Secretary to disallow the benefits of community property laws if the taxpayer acted as if he or she were solely e

Under certain circumstances, section 66 provides that a taxpayer may be relieved of liability from Federal income tax on community property income earned by a spouse.

ed for 1983 through 1988. In the notices of deficiency issued to IRA for 1983 through 1988, respondent determined that the entire defíciency for each year was a substantial understatement of tax fo which IRA was liable for the addit·ion to tax under section 66 1(a). IRA contends that it is not liable for the section 6661(a) addition to tax because there was substantial authority for the positions it took with respect to the disallowed items. - 605 - and capital loss items, IRA failed to make any

Section 66!51(a)(1) Failure To File Addition to Tax for 2002 and 2003 As an alternative to section 6651(f), respondent contends that Dr. and Mrs. Alexander are liable for additions to tax pursuant to section 6651(a)(1) for 2002 and 2003. Section 6651(a)(1) provides for an addition toitax for failure to timely file a Federal income tax return (deter

In cases involving fraudulent conveyances, the burden of proofis on the creditor to establish fraud, and the creditor must show that the conveyance was made without fair consideration, leaving the grantor insolvent or made with actual intent to hinder, delay, or defraud creditors. Hicks v. Whiting, - 17 - 258 S.W. 784 (Tenn. 1924

imposed sanctions against respondent by relieving petitioners of liability for (1) the interest component of the addition to tax for negligence under former section 66.53:(a), and (2) the incremental interest attributable to the increased rate prescribed .in former section 6621(c) .

imposed sanctions against respondent by relieving petitioners of liability for (1) the interest component of the addition to tax for negligence under former section 66.53:(a), and (2) the incremental interest attributable to the increased rate prescribed .in former section 6621(c) .

Section 66 provides for the treatment of “community income” in community property States when the spouses do not file jointly. This section, amended in 1984 by the Deficit Reduction Act of 1984, Pub. L. 98-369, sec. 424(b), 98 Stat. 801, allocates the income between the spouses, and its subsection (c), embodying relief referred to as “traditional r

-5- for 2001 and 2002, and therefore was liable for increased deficiencies, increased penalties under sec ion 6663, and increased additions to tax under section 66 1(a) (1) .5 On November 15, 2006, trial was held in San Fr ncisco, California.

Section 66 of the Internal Revenue Code is useable and applicable by spouse in 1986. * * *[Ms. Smith and petitioner] each agree that they will file their separate returns for 1986 in accordance with said section and pay the tax computed under said separate returns. The Internal Revenue Service examined petitioner’s 1986 Federal income tax return. I

come as community property income or in allocating half of it to Mrs. Rinn. We therefore consider petitioners to have conceded these issues. See Vincent v. Commissioner, T.C. Memo. 1994-345. Nor has Mrs. Rinn sought relief from liability pursuant to sec. 66; accordingly, we deem her to have waived any such claim. As previously noted, respondent concedes that the dental practice income should not be double counted in Mr. and Mrs. Rinn’s taxable incomes and that deficiencies in petitioners’ taxes

ehart v. Commissioner, supra, herein by this reference. On June 21, 1991, Jeana L. Yeager (Ms. Yeager)4 signed a loan application for $75,000 from Advanta Mortgage Corp. USA 2 The question of whether Jeana L. Yeager is entitled to relief pursuant to sec. 66 or 6015 is moot because in Rinehart v. Commissioner, T.C. Memo. 2002-9, we concluded that Mr. Rinehart engaged in his horse breeding activity for profit. 3 Unless otherwise indicated, all section references are to the Internal Revenue Code in

ehart v. Commissioner, supra, herein by this reference. On June 21, 1991, Jeana L. Yeager (Ms. Yeager)4 signed a loan application for $75,000 from Advanta Mortgage Corp. USA 2 The question of whether Jeana L. Yeager is entitled to relief pursuant to sec. 66 or 6015 is moot because in Rinehart v. Commissioner, T.C. Memo. 2002-9, we concluded that Mr. Rinehart engaged in his horse breeding activity for profit. 3 Unless otherwise indicated, all section references are to the Internal Revenue Code in

sole right of a court is to ascertain, through the rule stated, and apply the authority. [Porges v. United States Mortgage and Trust Co., supra at 426; cf. Matter of Zalewski, 55 N.E. 2d 184, 187 (1944); 3 NY Jur. Agency and Independent Contractors sec. 66 (1979).] Petitioner's power of attorney authorized the attorney-in- fact to "do anything he or she considers necessary and proper to conduct this business with the Bank". [Emphasis added.] "[T]his business" refers to the explicit grant of aut

66-9-306 (West 2020) (conservation easement valid even ifno privity ofestate or contract or no benefit to any other land, and "[n]o conservation easement shall be held automatically extinguished because ofviolation ofits terms or frustration ofits purposes"). These state-law changes help make conservation easements perpetual, but the mix ofsta

Federal Tax Law Treatment ofCommunityProperty Section 66 deals with the treatment ofcommunity income.

Federal Tax Law Treatment ofCommunityProperty Section 66 deals with the treatment ofcommunity income.

Section 66.62(a) imposes a penalty equal to 20 percent of the amount of-any underpayment attributable to negligence or- disregard of rules or regulations. Sec.- 6662(b) (1). The term "negligence" includes any failure to make a reasonable attempt to comply with tax laws, and the term "disregard" includes any careless, reckless, or intentional disreg

Although the regulation cites § 66fí4 (c) (1) as an example of a partner-level defense, it do$s not foreclose a similar defense on behalf of the paËtnership; it only states that "whether the partner had met the criteria of * * * section 6664 (c) (1) " is a pa$tner-level defense.

Respondent also determined for 20iO5 an addition to tax for failure to file timely under section 66:51(a) (1) of $395.77 and an addition to tax for failure to pay timely under section 6651(a) (2) of $351.80.

Under section 66.62(d) (2) (B), any understatement for purposes of the penalty for a substantial understatement of income tax shall be reduced by that portion of the understatement which is attributable to "the tax treatment of any item by the taxpayer if there -is or was substantial authority for such treatment". Authority for this,purpose m.ay include

Because petiti ner failed to offer any evidence of reasonable cause and lack of willful neglect for his failure to file timely, respondent's determination that petitioner is liable for the addition^to tax under section 66 1(a) (1) is sustained.

of tax attributable to certain`i circumstances, including,:under:section 66.62(b)(2), a "substantial, understatement,of income tax ." Section 6664(a) defines an, .

to-the addition to tax',I:under,,;,: section 66.51 (a)(1), but also petitioners have.

§§ 66'511or 6654 ." A trial was held in San Antonio,- Texas, on, February 25, 2009;'to determine whether petitioner is entitled to a refund of the alleged overpayment of $171,081.59 as, shown on his delinquent 2005 tax .return . OPINION At the trial and in his posttrial briefs and other filings petitioner traces the claimed payment of $281,083 .07 t

The section 66,51(a)(2) addition to tax is not imposed if the taxpayer proves that the failure to pay is due to reasonable cause and not willful neglect . Under section 6651(g) ( 2), a return prepabyrtehed S ecYre tarYy pursuant to section 6020(b) is treated as a:return filed by the taxpayer for the purpose of determining the amount of an addition to t

The accuracy-related penalty.applies,to any underpayment of tax required to be.shown(cid:127)on aireturn that -is attributable t negligence or disregard of rules or regulations under section 66,62 (b) (1) .

9 T .C. 191, 197 (2002) . Petitioner suggests that the Court "arguably rendered a different jurisdictional holding in Bernal v . Commissioner , 120 T.C. 102 (2003), where the Court dismissed for lack of jurisdiction a spouse's.claim for relief under section 66 . The rationale of that case is that Congress had not by statute 7 provided this Court with jurisdiction under section 66, in contrast to section 6015, where the grant of jurisdiction is explicit . See Bernal v . Commissioner, supra at 107

Responden 's determinations of accuracy-related penalties under section 66 2(a) for 2002, 2003, and 2004 are sustained.

Section 66.51(a)(1) imposes an addition to tax for failure to file a timely return unless the taxpayer proves that such failure is due to reasonable cause and not willful neglect .- See United States v . Boyle , 469 U .S . 241, 245 (1985) . Pursuant to section 7491(c), respondent has the burden of production with respect to this addition to tax and

ases in the Tax Court, the statute of limitations is a jurisdictional question). Unless otherwise indicated, all Rule references are to the Tax Court Rules of Practice and Procedure. - 4 - Additions to Tax Petitioners Deficiency Sec. 6653 (a) (1) · Sec. 66:53 (a) (2) Sec. 66 1 The Harlans $548,186 $27,409 1 . $137,.0 7 The Ockels 62,490 3,125 . 2 15,6 3 ¹ 50 percent of interest due on $548,186. 2 50 percent of interest due on $62,490. The inst'ant cases have been severed from docket Nos. 15653-