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States, 853 F. Supp. 396 (M.D. Fla. 1993) (where the treatment
accorded compensation expense was held not to have been
reasonable and in good faith but the treatment of depreciation
was held to have satisfied such requirement); Metra Chem Corp. v.
Commissioner, 88 T.C. at 661-662 (where the treatment of cash
dividends actually received, which are customarily recognized as
taxable, overcame the reliance on professional advice and
constituted negligence but such reliance avoided negligence where
depreciation was involved).
We hold that petitioners are not liable for the accuracy-
related penalty.
Innocent Spouse
Section 6013(e)(1) provides if:
(A) a joint return has been made under this
section for a taxable year,
(B) on such return there is a substantial
understatement of tax attributable to grossly
erroneous items of one spouse,
(C) the other spouse establishes that in
signing the return he or she did not know, and had
no reason to know, that there was such substantial
understatement, and
(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
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