- 14 -
Petitioners bear the burden of proving that Mrs. Hall satisfies
each statutory requirement of section 6013(e). Stevens v.
Commissioner, 872 F.2d 1499, 1504 (11th Cir. 1989), affg. T.C.
Memo. 1988-63; Purcell v. Commissioner, 826 F.2d 470, 473 (6th
Cir. 1987), affg. 86 T.C. 228 (1986); Bokum v. Commissioner, 94
T.C. 126, 138 (1990), affd. 992 F.2d 1132 (11th Cir. 1993). The
parties agree that the requirements of section 6013(e)(1)(A) and
(B) have been met. At issue are the knowledge and inequity
requirements of section 6013(e)(1)(C) and (D).
Petitioners failed to include the distribution in their
reported gross income because they erroneously believed that it
fell within the provisions of section 105(c). However, it is
clear that when the grossly erroneous items giving rise to an
understatement of tax are unreported gross income, the knowledge
contemplated by section 6013(e)(1)(C) is knowledge of the
transaction itself as opposed to knowledge of the tax
consequences of the transaction. Purcell v. Commissioner, supra
at 474; Quinn v. Commissioner, 524 F.2d 617, 626 (7th Cir. 1975),
affg. 62 T.C. 223 (1974); Bokum v. Commissioner, supra at 146;
Smith v. Commissioner, 70 T.C. 651, 672-673 (1978).
We have found that Mrs. Hall knew of the distribution that
was made to Mr. Hall from the Plan during 1988. Mrs. Hall's
claim that she qualifies as an innocent spouse stems from her
misapprehension of the tax consequences and not from ignorance of
the fact of the distribution. Mrs. Hall knew of the
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Next
Last modified: May 25, 2011