- 8 - (C) the other spouse establishes that in signing the return he or she did not know, and had no reason to know, that there was such substantial understatement, and (D) taking into account all the facts and circumstances, it is inequitable to hold the other spouse liable for the deficiency in tax for such taxable year attributable to such substantial understatement, then the other spouse shall be relieved of liability for tax (including interest, penalties, and other amounts) for such taxable year to the extent such liability is attributable to such substantial understatement. (In 1984, section 424(a) of Pub. L. 98-369, 98 Stat. 801, 803, amended the Code to provide that current section 6013(e) is applicable to all taxable years to which the Internal Revenue Code of 1954 applies, which includes 1976, 1977, and 1978.) Respondent concedes that petitioner satisfies the section 6013(e)(1)(A) and (B) and 6013(e)(4) elements of the innocent spouse requirements for the relevant years. (Section 6013(e)(4) relates to understatements exceeding a specified percentage of the putative innocent spouse's income.) Therefore, the two elements of the innocent spouse requirements remaining in dispute are whether petitioner had the kind of knowledge referred to in subparagraph (C), and whether under the facts of this case there would be the type of inequity referred to in subparagraph (D). In reaching our conclusions as to Arlene's liability we are substantially aided by guidelines provided by the recent decisions of the U.S. Court of Appeals for the Second CircuitPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Next
Last modified: May 25, 2011