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this joint liability for a year if certain requirements are met
for that year. The putative innocent spouse must show the
following: (1) A joint income tax return was filed for the year
(sec. 6013(e)(1)(A)); (2) on this tax return there is a
substantial understatement of tax (sec. 6013(e)(1)(B)); (3) this
substantial understatement of tax is attributable to grossly
erroneous items (sec. 6013(e)(1)(B)); (4) the grossly erroneous
items are items of the other (the putative "guilty") spouse (sec.
5(...continued)
(D) taking into account all the facts and
circumstances, it is inequitable to hold the other
spouse liable for the deficiency in tax for such
taxable year attributable to such substantial
understatement,
then the other spouse shall be relieved of liability
for tax (including interest, penalties, and other
amounts) for such taxable year to the extent such
liability is attributable to such substantial
understatement.
(2) Grossly erroneous items.--For purposes of this
subsection, the term "grossly erroneous items" means,
with respect to any spouse--
(A) any item of gross income attributable to
such spouse which is omitted from gross income,
and
(B) any claim of a deduction, credit, or
basis by such spouse in an amount for which there
is no basis in fact or law.
Although the year before us is 1981, we apply the statute as
amended in 1984, because section 424(a) of the Deficit Reduction
Act of 1984 (DEFRA), Pub. L. 98-369, 98 Stat. 494, 801, amended
sec. 6013(e) retroactively to all open years to which the
Internal Revenue Code of 1954 applies. Sec. 424(c)(1) of DEFRA,
98 Stat. at 803.
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