Nancy Silverman and Estate of Sheldon Silverman, Deceased, Nancy Silverman, Executrix - Page 25

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          6013(e)(1)(B)); (5) when the tax return was signed the putative             
          innocent spouse did not know, and had no reason to know, that               
          there was this substantial understatement of tax (sec.                      
          6013(e)(1)(C)); and (6) it is inequitable to hold the putative              
          innocent spouse liable for the tax deficiency that is                       
          attributable to this substantial understatement of tax.  Sec.               
          6013(e)(1)(D).  Also (as elements of item (3), supra), if any               
          such item is a claim of deduction, credit, or basis, then the               
          putative innocent spouse must show that the claim has no basis in           
          fact or law (sec. 6013(e)(2)(B)); and the tax liability for these           
          items must exceed a certain percentage of the putative innocent             
          spouse's income for the preadjustment year, in the instant case,            
          1988.6  Sec. 6013(e)(4); Hayman v. Commissioner, 992 F.2d 1256,             
          1260 (2d Cir. 1993), affg. T.C. Memo. 1992-228; Bokum v.                    
          Commissioner, 94 T.C. at 138, 992 F.2d at 1133-1134.                        





          6    The preadjustment year is "the most recent taxable year                
          * * * ending before the date the deficiency notice is mailed."              
          Sec. 6013(e)(4)(C).  The notice of deficiency was mailed on May             
          26, 1989; thus 1988 is the preadjustment year.  Nancy's 1988                
          income was increased by her profit on the sale of the New Jersey            
          home.  This increase in Nancy's 1988 income was enough to                   
          disqualify her from innocent spouse treatment for 1982                      
          (deficiency of $27,232), but not for 1981 (deficiency of                    
          $185,361).  Because the parties agree that the preadjustment year           
          substantiality requirement is enough to disqualify Nancy from               
          innocent spouse treatment for 1982, we do not consider whether              
          she failed to meet any of the other requirements as to 1982.                




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