By: Dana M. Horlick, Attorney, Woodruff Family Law Group
Hammernik v. Comm’r, T.C. Memo. 2014-170, 2014 WL 4119398 (2014)
(a) Facts: A husband and wife were divorced in Wisconsin. In 2003, before the divorce, the husband’s business encountered hard times, and he withdrew $104,909 from his personal retirement account to pay living expenses.
The parties filed a joint income tax return for 2003. They reported the withdrawn retirement funds as income, and returned tax due of $15,058, but failed to pay this amount.
The divorce decree left the parties equally responsible for paying all federal tax debts.
The husband paid more than half of the tax debt, and sought innocent spouse relief from the remainder. The IRS granted only partial relief, and no relief from the tax on the retirement withdrawal. The husband appealed to the Tax Court.
(b) Issue: Was the husband entitled to innocent spouse relief from the tax on the retirement withdrawal?
(c) Answer to Issue: No.