The joys of being married to a TP

[Quixote]

The wife of a Losthead named SamHoustonhas received a proposal from the IRS to assess the tax on her unreported community income. Sam filed a CTC return for 2004. The little woman, having more sense, filed a legitimate separate return. (Although, she apparently filed it late or IRS would not have waited so long to contact her.)

Why is IRS proposing an assessment against Mrs. Sam instead of issuing a notice of deficiency to Sam based on his unsplit income? Because the IRC says his gross income is half of the community's income unless he files a return reporting more. So the only way the IRS can ensure that all the income is accounted for is to treat half the community income as Mrs. Sam's. Sam could take the pressure off his wife by filing a legitimate return reporting all of his income, but ...

[Imalawman]

The wife of a Losthead named SamHoustonhas received a proposal from the IRS to assess the tax on her unreported community income. Sam filed a CTC return for 2004. The little woman, having more sense, filed a legitimate separate return. (Although, she apparently filed it late or IRS would not have waited so long to contact her.)

Why is IRS proposing an assessment against Mrs. Sam instead of issuing a notice of deficiency to Sam based on his unsplit income? Because the IRC says his gross income is half of the community's income unless he files a return reporting more. So the only way the IRS can ensure that all the income is accounted for is to treat half the community income as Mrs. Sam's. Sam could take the pressure off his wife by filing a legitimate return reporting all of his income, but ...

She can rebut that if she has documentation, though, or least we do that here on the state level. We've had some "smart" wives of TPs before and although one was married to a doctor and made substantially less, she had lots of documentation, so we assessed him only. I guess it occurs to me that I don't know what the IRS would do, would they still impute income to the wife - sort of like in embezzlement cases?

[Judge Roy Bean]

The IRS seems to be easily confused in marital affairs.

I have a married acquaintance who received an individual assessment for allegedly not filing even though they had filed jointly for years. The first person they talked to tried to come up with an explanation but it wound up in circular logic surrounding a theory of primary vs. secondary. They found the return in question and it indeed was a joint filing and although the IRS dropped the assessment, the next year's refund was reduced by the penalties and interest sought in the erroneous assessment.