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asserts that her argument is supported by the District Court's
decision in a forfeiture action with respect to certain real
estate owned jointly by petitioners. The District Court ordered
forfeiture as to Charles' interest in the land; however, Martha
was found to be an innocent party under Federal civil forfeiture
law and entitled to retain her interest in the land. United
States v. 35 Acres in Cherokee County, N.C., No. B-C-88-173
(W.D.N.C. April 6, 1990), affd. 940 F.2d 654 (4th Cir. 1991).
Martha argues that she had no reason to know of Charles'
illegal activities. To this end, Martha makes a number of
statements as to petitioners' lifestyle, her education, and her
involvement in Charles' business. Finally, Martha argues that it
would be inequitable to hold her liable. Martha's arguments, as
were Charles', are set forth in an array of self-serving
statements and assertions.
Section 6013(e) provides that a spouse is relieved from
liability for tax where a joint return has been made for a
taxable year and on that return there is a substantial
understatement of tax attributable to grossly erroneous items of
the other spouse, if: (1) The would-be innocent spouse
establishes that she did not know, and had no reason to know,
that there was such a substantial understatement; and, (2) taking
into account all the facts and circumstances, it is inequitable
to hold that spouse liable for the deficiency in tax attributable
to the substantial understatement. Martha has the burden of
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