Michael B. Butler and Jean Butler v. Commissioner of Internal Revenue

Summary

The Tax Court denied Jean Butler innocent spouse relief under section 6015(b)(1), holding that her college education, experience operating her own S corporation, control of the family's finances, the couple's ongoing IRS disputes over prior years, and her actual knowledge of her husband's BGE-DuPont settlement gave her reason to know of the $79,380 unreported flowthrough income and triggered a duty of inquiry. It denied her motion to reopen the record for proportionate relief evidence under section 6015(b)(2) for lack of particularity and held she did not qualify for such relief on the existing record. The court held it has jurisdiction, as part of the deficiency redetermination proceeding, to review the Commissioner's denial of equitable relief under section 6015(f) for abuse of discretion — rejecting respondent's statutory-preclusion and committed-to-agency-discretion arguments — but found no abuse because no economic hardship, marital abuse, or other compelling circumstance supported relief. Decision was entered for respondent; the section 6651(a)(1) addition to tax was deemed abandoned.