Supplemental Memorandum Findings of Fact and Opinion
FAY, Judge:
In our Memorandum Findings of Fact and Opinion in Sam Shapolsky [Dec. 30,661(M)], T.C. Memo. 1971-37, filed February 24, 1971, we sustained respondent's determination of substantial deficiencies and additions to tax for fraud for the years 1955 through 1958. It was specified that decisions would be entered under Rule 50. The decisions have not yet been entered by reason of petitioners' motion to relieve Adele Shapolsky of liability as an innocent spouse under the recently enacted section 6013(e)
The question we must now consider is whether petitioner Adele Shapolsky is relieved of liability for the deficiency and the fraud penalty under sections 6013(e) and 6653(b).
Findings of Fact
Sam Shapolsky and Adele Shapolsky (hereinafter referred to as Adele or petitioner) were married in 1937, and this marriage has continued until the present time. They have two children by their marriage. During the years 1950 through 1960 Sam Shapolsky and his brother, Martin, were engaged in the real estate business as the Eagle Realty Associates. They maintained an office for a portion of that time at 608 East 11th Street, New York, N.Y. Adele was never a stockholder, officer, or employee of any corporation or enterprise in which her husband was involved and was never at any time involved in Sam's business affairs. She visited his office infrequently, and with one minor exception all of these visits were purely social.
A small portion of the income shown on the joint returns for the years in question came from income-producing assets held by petitioner either individually or jointly with her husband. This income was relatively minor compared with the income attributable to Sam's business activities. The deficiencies in question resulted primarily from omissions attributable to Eagle Realty. None of the omissions resulting from Eagle Realty's income is attributable to Adele.
During the period involved herein Adele devoted herself exclusively to her duties as mother and housewife. She had no reason to know the amount of income generated by any of her husband's endeavors. Furthermore, petitioner received no funds beyond the normal amount needed to support her household. At the present time she has no savings accounts in savings banks, stocks, real estate, or any other substantial assets held in her own name or joint names.
Adele signed joint returns with her husband for the years in question. She signed these returns at the request of her husband and at no time questioned their content.
Opinion
In recently enacted P.L. 91-679, enacted January 12, 1971, effective for all taxable years governed by either the 1954 or 1939 Codes, Congress amended section 6653
The sole issue remaining for determination is the application of section 6013(e) for the years 1955 through 1958.
P.L. 91-679 amended section 6013 by adding section 6013(e) which provides that a spouse is to be relieved from liability for tax, interest, and penalties if the following three conditions are satisfied:
This Court's findings in Sam Shapolsky, supra, indicated that the alleged omissions from gross income for the year 1958 were less than 25 percent of the gross income stated in the return. The recently enacted statute cannot be applied to absolve petitioner from tax liability for that year.
Our remaining concern, therefore, is whether the requirements of section 6013(e) have been met for the years 1955, 1956 and 1957.
Respondent has conceded that for these years no part of the omissions resulting from unreported income received from Eagle Realty is attributable to petitioner. In light of the fact that the bulk of the omissions are related to Eagle Realty income, this concession by itself seemingly enables petitioner to meet the requirements of section 6013(e)(1)(A) for the years 1955, 1956, and 1957.
For the years in question the requirements of section 6013(e)(1)(B) have been met. We have carefully considered all of the evidence in the previous trial and the supplemental hearing and have concluded that Adele in signing the joint returns did not know of and had no reason to know of the omissions from those returns. Senate Report No. 91-1537, 91st Cong., 2d Sess. (1970), 1971-1 C.B. 606, 607, in discussing the burden of proof of the innocent spouse as to this issue states: "It is intended that the spouse in such a situation, will have the usual burden of proof (preponderance of the evidence) in this issue." Adele's testimony and the facts and circumstances as revealed in the entire record are sufficient to meet this burden. Cf. Jerome J. Sonnenborn [Dec. 31,109], 57 T.C. 373 (1971).
Finally, based on all the evidence adduced at both trials, we are convinced that petitioner did not receive any significant benefit as that term is intended in section 6013(e).
Decisions will be entered under Rule 50.
FootNotes
(b) Fraud. — If any part of any underpayment (as defined in subsection (c)) of tax required to be shown on a return is due to fraud, there shall be added to the tax an amount equal to 50 percent of the underpayment. In the case of income taxes and gift taxes, this amount shall be in lieu of any amount determined under subsection (a). In the case of a joint return under section 6013, this subsection shall not apply with respect to the tax of a spouse unless some part of the underpayment is due to the fraud of such spouse.
Omitted
from Gross
Total Income as
Income Stated in
Reported Deficiency
Year on Return Notice
1958 ............ $53,113.18 $11,422.76
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