Dr. Dino's Wife's Tax Court Case!

[Paths of the Sea]

Nikki,

Dr. Dino's wife, I have now noticed, has also recently filed a Tax Court case:

Petitioner: Jo Delia Hovind

Docket #: 001362

Counsel:
> James L. Chase
> Chase, Quinnell & Jackson

Address:
> 101 E. Government Street
> Pensacola, FL 32502

01/15/2010 Petition Filed: Fee Paid

01/15/2010 Request for trial at Tampa, FL

03/22/2010 Answer (C/S 03/19/10)

Nikki, what can you tell us about that proceeding. It appears Jo has taken a little bit different course than her husband, Dr. Dino (aka Kent Hovind).

Sincerely,
Maury Enthusiast!

[Paths of the Sea]

That should be:

> Docket #: 001362-10

Sincerely,
Maury Enthusiast!

[Nikki]

I haven't checked yet, but I'm going to stick my neck out -- innocent spouse

edits, gloating, abject apology, or more information to follow

[Paths of the Sea]

Nikki,

Thanks for the interest and the effort.

I thought about innocent spouse, but I can't see them every having filed a joint return????

I look forward to resolving some of the speculation. Looks to me like she has a legitimate counsel and may be working on some kind of split with Dr. Dino.

Sincerely,
Maury Enthusiast!

[Nikki]

Notice of deficienct dated 11/20/09

Same years and amounts as husband

Basis of case:

in 2009, hired a CPA firm to prepare and file returns for 98 - 06 with her income each year being "in kind benefits" of around $5,500 for housing, $1,000 for automobile, and $8,000 for occupancy of living space plus $1,000 - $2,000 per year from her business as a piano teacher.

So, she's claiming an effective income of around $15,000 - $18,000 per year instead of income sufficient to generate an annual deficiency in the range of $100,000 - $300,000 per year.

Based on the text of the filing, either her attorneys are just a set of parrots, or they have connection-with-reality issues similar to those of her hnusband's crack [headed] legal team

My bad -- no innocent spouse issue.

[Paths of the Sea]

Nikki,

So, the IRS, to protect its interests, issued deficiency notices to both separately for the same $3,000,000.00 + amounts and Jo is coming back to try and propose that her share could not have been more than $20,000.00 or so?

Depending on the litigating strategy, that could put Jo in the position of testifying against her husband (e.g., "It's all his income, whatever it was; I only made $20,000.00 or so!).

What think ye?

SIncerely,
Maury Enthusiast!

[notorial dissent]

I would say the ending bodes not well, one way or another, maybe they're going for twofers on jail time.

I can see perjury charges as well materializing further on down the road as well for either or both of them.

[Imalawman]

Notice of deficienct dated 11/20/09

Same years and amounts as husband

Basis of case:

in 2009, hired a CPA firm to prepare and file returns for 98 - 06 with her income each year being "in kind benefits" of around $5,500 for housing, $1,000 for automobile, and $8,000 for occupancy of living space plus $1,000 - $2,000 per year from her business as a piano teacher.

So, she's claiming an effective income of around $15,000 - $18,000 per year instead of income sufficient to generate an annual deficiency in the range of $100,000 - $300,000 per year.

Based on the text of the filing, either her attorneys are just a set of parrots, or they have connection-with-reality issues similar to those of her hnusband's crack [headed] legal team

My bad -- no innocent spouse issue.

Why would this be a bogus case, Nikki? I'm a little lost as to why she doesn't have a case here. Am I missing some facts?

[Nikki]

Bogus?

Spouse claiming her only income was her receipts for teaching piano and the value of "in kind" benefits she received -- but pay no attention to that pile of money under the rug.

No allegation of anything to warrant innocent spouse, thereby separating her from the benefits of her husband's income or his tax liability.

[Paths of the Sea]

Perjury?

Some may recall that Dr. Dino had a little perjury problem when he was trying to use the bankruptcy court to further his scheme.

Then he didn't testify in his criminal trial.

Tax Court will be a little different if it makes it to trial.

I'm wondering if the feds are going to try and consolidate the two cases for trial since it appears they involve the same issues and some dispute as to who is going to get to pay the tax on the disputed income.

[Imalawman]

Bogus?

Spouse claiming her only income was her receipts for teaching piano and the value of "in kind" benefits she received -- but pay no attention to that pile of money under the rug.

No allegation of anything to warrant innocent spouse, thereby separating her from the benefits of her husband's income or his tax liability.

Well, I might disagree here. There's been no joint return yet, Nikki. Let's say they do not live in a community property state, her income is her income. She takes the in-kind taxable benefits she received, plus her income from services performed and she has her taxable income. She files a married filing separately return. I think that's how I would start her case. The fact that there were no returns filed (do SFRs count?) makes her case somewhat easier I think.

I think the Service would be jumping ahead of themselves here to quickly put this off as bogus. I'd take the case and I think it could be won, too. (granted I don't have all of the facts here) For instance, let's say, Mrs. Gates reports on a separate return $2,000 of income and Bill reports $100M on his return. She's not liable for any underpayment on that amount if they do not live in a community property state. I think Ms. Dino is doing just that. Her case would be very hard had she filed jointly from the get-go, though.

[Prof]

IIRC, Florida is a "tenancy by the entirety state," and is not a community property state.

[Paths of the Sea]

Let's say the government can show that $1,000,000.00 a year went through accounts owned or controlled by Dr. Dino and his wife.

Neither one reported the income.

So, the government takes the proverbial "whipsaw" position and proposes that the $1,000,000.00 is taxable to both parties until the issue is ultimately resolved by the Court.

Kinda like what has been done at times when both parents filed separate returns and each claim the same kids' exemptions or one claims an alimony deduction and the other claims it is not alimony.

So, both Dr. Dino and his wife should go to court together and deal with the judge in deciding how much it was and why it should or should not be taxed to one or the other.

Such cases can certainly be entertaining at times and I figure these cases, if they go to trial together and Dr. Dino and his wife are compelled to testify, could get real entertaining.

Of course, prior to trial, Jo might work out a deal and settle her case to Kent's detriment. That development would also be most interesting.

Sincerely,
Maury Enthusiast!

[bmielke]

From what Nikki described I wonder why an innocent spouse petition wasn't filed wouldn't you need to prove the same things, and wouldn't an innocent spouse prove better for her in the long run>

[Nikki]

An IS petition (which should be preceeded by an IS filing with Appeals) would probably have been a non-starter.

First, they never filed returns. She'd have to prove that for nine years she knew she had an obligation to file and took hubby at his word that he had filed (did she ever remember signing a return?).

Next, she'd have to show she never received ant benefit from the funds.

Also, the fact that they're not divorced or separated (other than by the steerlbars) would count against her.

[Paths of the Sea]

I've been out of the business for a few years, but isn't it the case that in order to use the "innocent spouse" defense you have to have filed a joint return.

None appears to have been filed in this case. Therefore, innocent spouse is simply not a possible defense.

In other words, innocent spouse, as I remember it, was in order to allow one spouse to get out of the otherwise statutory liability that goes along with having filed a joint return.

Sincerely,
Maury Enthusiast!

[Imalawman]

I've been out of the business for a few years, but isn't it the case that in order to use the "innocent spouse" defense you have to have filed a joint return.

None appears to have been filed in this case. Therefore, innocent spouse is simply not a possible defense.

In other words, innocent spouse, as I remember it, was in order to allow one spouse to get out of the otherwise statutory liability that goes along with having filed a joint return.

Sincerely,
Maury Enthusiast!

Mostly correct. Which is why if I had this case, I would start with filing returns for those years as married filing separately. Certainly the IRS can challenge this amount. But I think the IRS has the harder case IF only Dr. Dino received paychecks in his name. If they both were working at Dinoland and the business then made wire transfers into the accounts, then it becomes much more difficult for the wife. However, simply because a wife benefits from a husband's income doesn't necessarily make that her income. So, they don't need innocent spouse relief yet, as there hasn't been a statutorily created joint liability. (again, I'm assuming no joint SFRs have been prepared and I'm not sure what effect those have on an IS petition).

I guess I'm a little sympathetic to the wives of these douchenozzles that don't pay taxes and leave their wives exposed to this kind of liability while they're carted off to jail.

[iplawyer]

I guess I'm a little sympathetic to the wives of these douchenozzles that don't pay taxes and leave their wives exposed to this kind of liability while they're carted off to jail.

I'm not. As I recall she actively participated in cashing checks that were just shy of the amount to trigger reporting the cash transactions to the IRS. I do not think this was an innocent spouse. This was a greedy spouse.

[wserra]

This was a greedy spouse.

This is a felon spouse, who got out of the hoosegow a couple of months ago after serving a one-year sentence. Courtesy of BOP:

JO D HOVIND 06453-017 54-White-F 12-03-2009 RELEASED

[iplawyer]

Well - okay - at the least she was greedy and now she is a convicted felon. I still have no sympathy for her.