Estate of Robert E. Sympson, Deceased, Elizabeth C. Sympson Personal Representative and Elizabeth C. Sympson - Page 2

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          published opinion T.C. Memo. 1994-2.  We held therein that                  
          petitioner Elizabeth C. Sympson was not eligible for relief under           
          section 6013(e)1 as an "innocent spouse".  The Court of Appeals             
          held that we erred in finding that it would not be inequitable to           
          hold Mrs. Sympson liable for the tax deficiency and remanded the            
          case for further proceedings.                                               
               To qualify for innocent spouse relief, a taxpayer must meet            
          all four of the requirements of section 6013(e).  It is                     
          undisputed that Mrs. Sympson had shown that she filed a joint               
          return and that there was a substantial understatement of tax               
          attributable to grossly erroneous items of her spouse (i.e.,                
          unreported embezzlement income).  Since we found that Mrs.                  
          Sympson did not qualify for relief because she failed to meet the           
          fourth requirement, we did not consider whether she met the third           
          test; i.e., whether she had proven that she did not know and did            
          not have reason to know that there was a substantial                        
          understatement on the returns.  Sec. 6013(e)(1)(C).  The Court of           
          Appeals therefore remanded the case for further findings of fact            
          on this issue.                                                              
               The tax years in issue are 1982 through 1987.  Beginning in            
          1982, and continuing to July 1987, Mrs. Sympson's husband                   
          embezzled $898,642 from an elderly widow named Olga Roderick and            

               1  All section references are to the Internal Revenue Code             
          in effect for the taxable period under consideration.                       

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