- 26 -
were filed. The accuracy-related penalties are sustained for all
years.
5. Innocent Spouse
Mrs. Kelly sought to escape liability on the ground that she
was an innocent spouse within the meaning of section 6013(e).
Under section 6013(e)(1), an individual who filed a joint return
with her spouse may obtain relief from joint liability for tax
where all of the following requirements are satisfied: (1) A
joint return was filed on which; (2) there was a substantial
understatement of tax attributable to grossly erroneous items of
her spouse; (3) in signing the return she neither knew nor had
reason to know of such understatement; and (4) taking into
account all the facts and circumstances, it would be inequitable
to hold her liable for the resulting deficiencies. It is
undisputed that joint returns were filed for each of the taxable
years at issue, that there was a substantial understatement for
each year, and that the understatements were attributable to
Mr. Kelly.
"Grossly erroneous items" include any claim of a deduction
"in an amount for which there is no basis in fact or law." Sec.
6013(e)(2)(B). The courts have held that a claim "without a
basis in fact or law" is one that is frivolous, fraudulent, or
phony. Friedman v. Commissioner, 53 F.3d 523, 529 (2d Cir.
1995), affg. in part and revg. in part T.C. Memo. 1993-549; Bokum
Page: Previous 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 NextLast modified: May 25, 2011