Margaret Wiksell v. Commissioner of Internal Revenue

concurring and dissenting:

Although I agree with the majority that the tax court did not abuse its discretion in finding that Mrs. Wiksell had reason to know of the substantial understatements of income, I cannot agree with its decision to remand this case to the tax court for further findings concerning apportionment.

The majority states that it is unclear whether Mrs. Wiksell argued before the tax court that she should not be held liable for the entirety of the tax deficiency resulting from the substantial understatements in taxable income. Maj. op. at 1463. I do not see the lack of clarity. It was her responsibility to show she raised the issue; she failed to do so. That should end the matter.

Undaunted, the majority proceeds to consider de novo whether there is sufficient evidence to indicate that Mrs. Wiksell did not have reason to know of “the magnitude of the understatement generated by her husband’s activities.” Id. Regardless whether Mrs. Wiksell presented the apportionment argument below, the tax court found that she had reason to know of the substantial understatements. This finding applies to all of the understatements and is not clearly erroneous. As she had reason…

I.

In 1987, Margaret Wiksell signed two joint tax returns for the years 1984 and 1985, both of which omitted substantial ill-gotten income generated by her (now ex) husband’s illicit business. Margaret Wiksell claims to have known nothing about most of the money taken nor anything about the scam that generated the funds. On March 7,1991, a notice of deficiency was issued to the Wiksells for tax years 1984 and 1985. The couple challenged the deficiency and, following a trial at which only Margaret attended, the tax court denied both taxpayers relief. Wiksell v. Commissioner, 67 T.C.M. 2360 (1994). This timely appeal followed and concerns only Margaret Wiksell (“Appellant”) in which she challenges the tax court’s determination that she was not an “innocent spouse” pursuant to 26 U.S.C. § 6013 (e).

We have jurisdiction pursuant to 26 U.S.C. § 7482 and remand so that the tax court can apply innocent spouse relief to that portion of the deficiency so deserving. The pertinent facts, most of which were stipulated, follow.

II.

Appellant was married in 1960, legally separated in 1988, and divorced in 1992. The *1461 couple had three children, although the middle daughter unexpectedly…

90 F.3d 1459 78 A.F.T.R.2d 96 -5697, 96-2 USTC P 50,398 , 96 Cal. Daily Op. Serv. 5481 , 96 Daily Journal D.A.R. 8961 Margaret WIKSELL, Petitioner-Appellant, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee. No. 94-70509. United States Court of Appeals, Ninth Circuit. Argued and Submitted Feb. 8, 1996. Decided July 25, 1996. Bruce I. Hochman, Charles P. Rettig, and Joanna Tulio, Hochman, Salkin & DeRoy, Beverly Hills, California, for petitioner-appellant. Sara S. Holderness, Tax Division, United States Department of Justice, Washington, D.C., for respondent-appellee. Appeal from the United States Tax Court, Arthur L. Nims III, Judge, Presiding. T.C. No. 11752-91-ALN. Before: WALLACE and T.G. NELSON, Circuit Judges, and WILLIAM D. BROWNING, 1 District Judge. WILLIAM D. BROWNING, District Judge: I. In 1987, Margaret Wiksell signed two joint tax returns for the years 1984 and 1985, both of which omitted substantial ill-gotten income generated by her (now ex) husband's illicit business. Margaret Wiksell claims to have known nothing about most of the money taken nor anything about the scam that generated the funds. On March 7, 1991, a notice of deficiency was issued to the…