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whether a taxpayer has established that he or she is entitled to
relief as an innocent spouse is one of fact. Park v.
Commissioner, supra at 1291.
Petitioner has satisfied the first requirement, because she
made a joint return with Mr. Fason for taxable year 1989.
The second requirement is that there be a substantial
understatement of tax attributable to grossly erroneous items of
one spouse. Sec. 6013(e)(1)(B). A substantial understatement is
any understatement which exceeds $500. Sec. 6013(e)(3). In
addition, relief is not available for spouses whose preadjustment
year gross income is $20,000 or less, unless the liability
attributable to the substantial understatement is greater than 10
percent of that adjusted gross income. Sec. 6013(e)(4)(A). If
the preadjustment year adjusted gross income is more than
$20,000, relief is available only if the liability is greater
than 25 percent of that adjusted gross income. Sec.
6013(e)(4)(B). However, if the understatement is attributable to
an omission of an item from gross income, the percentage-of-
adjusted-gross-income rules discussed above do not apply, but the
understatement must still exceed $500. Sec. 6013(e)(4)(E).
There are two types of grossly erroneous items: (1) any
claim of a deduction, credit, or basis by a spouse in an amount
for which there is no basis in fact or law, and (2) any item of
gross income attributable to a spouse which is omitted from gross
income. Sec. 6013(e)(2). Thus, an understatement of tax
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Last modified: May 25, 2011