Death of Taxpayer - Tax Court Petition

[BulldogTom]

I have a client (mfj) under audit for gambling winnings in 2009. Their documentation is a little on the light side, but there is enough to reasonably reconstruct the facts. We fully expect the client to go to tax court because the correspondence audit is not going well. The wife had a gambling problem and it is her SS# that the winnings are under. They filed MFJ for 2009.

The wife died on Tuesday. I am totally blown away by this very unexpected death. These were friends before they were clients and she is not much older than my wife. Her daughter attends my church youth group with my kids.

How does the spouse continue on to Tax Court when the Notice of Deficiency arrives? This is a new one on me and I really don't have a clue how to proceed from here. Does the surviving spouse sign everything and attach a copy of the death certificate? Can he testify to what his wife would have testified to had she lived? Can they even proceed without her?

I had a very clear strategy in mind for this case, but it depended on the wife testifying about her gambling problem, which she was willing to do. I need to come up with a new strategy, but as I said, the documentation is a little light. They don't have any money, and I am not sure they have enough to pay for the funeral, let alone taxes on phantom gambling winnings.

Any thoughts would be appreciated.

Tom

Lodi, CA

[Catherine]

Tom --

I have no professional thoughts to assist you - but my deepest sympathies on the loss of your friend, and my best wishes for good advice from others here on this case.

Catherine

[jainen]

>>Does the surviving spouse sign everything <<

Is he the executor of her estate? In any case, he can't "testify" for her, only what he knows himself. Her story becomes hearsay from now on, which unfortunately requires even better documentation to corroborate it.

Not to sound cold, but there may be new strategies to take advantage of. At least make a fresh plea for a reasonable settlement reflecting the uncertainty and unfairness of the situation. That probably won't count for much in Tax Court, but you have to raise every issue in the examination or you lose the right to even try it in court.

You could also ask that everything be put on hold for 120 days. Maybe in the meantime a different auditor will get assigned.

[Gail in Virginia]

And is there any chance that with the death of his wife the taxpayer can make a case for innocent/injured spouse?

My sympathies also, Tom. It is difficult to think clearly about taxes at a time like this.