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become jointly and severally liable for the entire tax. Sec.
6013(d)(3). A spouse may be relieved of liability, however, if
the following requirements of section 6013(e) are satisfied: (1)
The taxpayer and his or her spouse file a joint return for the
taxable year; (2) there is a substantial understatement of tax
attributable to grossly erroneous items of the latter spouse; (3)
the taxpayer establishes that in signing the return he or she
neither knew, nor had reason to know, of the substantial
understatement; (4) taking account of all the facts and
circumstances, it is inequitable to hold the taxpayer liable for
the deficiency in tax resulting from the substantial
understatement; and (5) the understatement exceeds 10 percent of
the taxpayer's adjusted gross income for the preadjustment year
(if such adjusted gross income is $20,000 or less). An
understatement is substantial if it exceeds $500. Sec.
6013(e)(3). Petitioner bears the burden of proving all five
conditions of section 6013(e) have been satisfied. Rule 142(a);
Ratana v. Commissioner, 662 F.2d 220 (4th Cir. 1981), affg. in
part and revg. in part T.C. Memo. 1980-353.
It is undisputed that petitioner filed a joint return for
each of the years in issue and that there were substantial
understatements on those returns attributable to Linda's
activities. The dispute then focuses on whether petitioner knew
or had reason to know of the understatements and whether it is
inequitable to hold petitioner liable for the deficiencies.
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