Stewart E. Fason and Jana K. Fason - Page 6

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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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