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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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