Angela Schwimmer - Page 14

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          that it is attributable only to Martin for purposes of section                     
          6013(e)(1)(B).  Respondent, however, contends that petitioner had                  
          reason to know of the embezzlement income and that it would not                    
          be inequitable to hold petitioner liable for the income tax                        
          deficiencies and additions to tax relating to the embezzlement                     
          income.                                                                            
                With regard to the $600,000 claimed Keogh deduction,                         
          respondent concedes that $15,000 thereof represents an allowable                   
          deduction on Martin and petitioner's 1983 joint Federal income                     
          tax return.                                                                        
                With regard to the application of the innocent spouse                        
          provision to the $585,000 balance of the claimed Keogh deduction                   
          that is to be disallowed, respondent concedes that the $585,000                    
          constitutes a grossly erroneous item.  Respondent, however,                        
          contends that the $585,000 is attributable not only to Martin,                     
          but also to petitioner, that petitioner had reason to know of the                  
          erroneous deduction and the circumstances surrounding the                          
          transaction giving rise to the claimed deduction, and that it                      
          would not be inequitable to hold petitioner liable for the income                  
          tax deficiencies and additions to tax relating to the disallowed                   
          $585,000 claimed Keogh deduction.                                                  
                Generally, an item on a return will be regarded as not                       
          attributable to a spouse if he or she was not involved in the                      
          activity giving rise to the item.  Feldman v. Commissioner, 20                     






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