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income tax liability that is joint and the portion from which
petitioner has been relieved.
Section 6013(e)(1), for the tax years in issue, is expressed
in terms of relief from liability for tax "to the extent such
liability is attributable to such omission from gross income [of
tax attributable to grossly erroneous items of one spouse]."7
The benefit of section 6013(e) is provided in the form of relief
from tax, not by permitting the innocent spouse to have the
benefit of a "grossly erroneous" deduction. Petitioner's relief
from the grossly erroneous leasing transaction losses is,
accordingly, limited to not subjecting her to tax liability
attributable to the disallowance of the loss. Petitioner was not
an innocent spouse as to the short-term capital loss
disallowance. Accordingly, she would be liable, along with Mr.
Friedman, for the portion of the liability attributable to the
disallowed portion of the short-term capital loss item.
The "eliminate therefrom" language of respondent's manual
addresses relief from tax liability attributable to a grossly
erroneous item. The manual language appears to be designed to
deal with grossly erroneous items attributed to either omitted
income or claim of a deduction, the disallowance of which
generates additional income. If computation of the joint
7 Later versions of sec. 6013(e)(1) have the phrase
"substantial understatement" as a replacement for the phrase
"omission from gross income".
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Last modified: May 25, 2011