Philip H. and Anna Friedman - Page 2

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            Friedman (petitioner) was not an innocent spouse within the                                    
            meaning of section 6013(e).3  The decision entered following the                               
            third opinion was affirmed in part and reversed in part, and the                               
            case was remanded to this Court for further proceedings.                                       
            Friedman v. Commissioner, T.C. Memo. 1993-549, affd. in part and                               
            revd. in part 53 F.3d 523 (2d Cir. 1995).                                                      
                  To qualify for innocent spouse relief, a taxpayer must meet                              
            all four of the requirements of section 6013(e).  We found that                                
            petitioner had shown that she filed a joint return and that a                                  
            certain tax shelter investment constituted a "grossly erroneous                                
            item" within the meaning of section 6013(e).  However, we found                                
            that petitioner did not qualify for relief because she failed to                               
            meet the third requirement; i.e., the requirement that she did                                 
            not know and did not have reason to know that the deduction would                              
            give rise to a substantial understatement.  Having reached that                                
            conclusion, we did not consider whether petitioner met the fourth                              




                  2(...continued)                                                                          
            whether "grossly erroneous items" could have been contained on a                               
            refund claim, Form 1045, rather than on the Form 1040, within the                              
            meaning of sec. 6013(e)(1)(B); Friedman v. Commissioner, T.C.                                  
            Memo. 1992-89, concerning whether the testimony of an expert                                   
            witness could be offered to show whether one of petitioners was a                              
            truthful witness; and Friedman v. Commissioner, T.C. Memo. 1993-                               
            549, which concerned whether Anna Friedman was an innocent spouse                              
            within the meaning of sec. 6013(e).                                                            
                  3 All section references are to the Internal Revenue Code                                
            in effect for the taxable period under consideration, and all                                  
            Rule references are to this Court's Rules of Practice and                                      
            Procedure, unless otherwise indicated.                                                         



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