-60-
innocent spouse relief. Stevens v. Commissioner, supra; Bokum v.
Commissioner, 94 T.C. 126, 138-139 (1990), affd. 992 F.2d 1132
(11th Cir. 1993).
The parties have stipulated that petitioners filed a joint
return for the years at issue, and respondent concedes that
except for the distributions of property that were ultimately
received by Mrs. Jones, the omissions from income are
attributable to petitioner.30
Thus, the controversy herein focuses on three items: (1)
Whether the substantial understatement is attributable to grossly
erroneous items; (2) whether Mrs. Jones did not know, and had no
reason to know, of the substantial understatement when she signed
the return in each of the years at issue; and (3) whether it
would be inequitable to hold Mrs. Jones liable for the income tax
deficiency attributable to such substantial understatement.
We conclude that the omissions of the corporate
distributions from income are grossly erroneous items, but that
the claim for the bad debt deduction is not a grossly erroneous
item; that Mrs. Jones knew or had reason to know of the
understatements when she signed the returns; and that it is not
inequitable to hold her liable for tax.
30 Respondent concedes that except for the Winterchase lots and
the lot on Papermill Road, which were transferred to Mrs. Jones,
and the income from the cancellation of the debt owed on the
Westfair townhouse, the omitted income items are attributable to
petitioner.
Page: Previous 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 NextLast modified: May 25, 2011