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*This opinion supplements our previously filed Memorandum
Findings of Fact and Opinion in Kelly v. Commissioner, T.C. Memo.
1996-529, filed Dec. 2, 1996.
deficiencies, additions to tax, and penalties, and denied the
claim of petitioner Ruth Kelly (petitioner) to relief from
liability as an innocent spouse under section 6013(e).1 The
Opinion is incorporated herein by this reference.
Petitioner filed a timely motion for reconsideration,
pursuant to Rule 161. Respondent filed a notice of objection and
memorandum of argument and authorities. Petitioner Edward Kelly
has not filed a response to petitioner's motion.
Petitioner argues that the Court incorrectly held that the
deductions for ordinary losses and for business expenses claimed
on the joint returns were not "grossly erroneous" within the
meaning of section 6013(e)(2)(B), as having "no basis in fact or
law", that upon reconsideration, the Court should conclude that
the husband's loss deductions claimed on the joint return
satisfied the "grossly erroneous" test, and that the Court should
proceed to determine that petitioner satisfied each of the other
requirements for innocent spouse status.
Specifically, petitioner argues that the Court, in rejecting
her argument that the deductions claimed were "phony", failed to
address whether they were "groundless" or "frivolous", and that,
1Except where otherwise noted, all section references are to
sections of the Internal Revenue Code in effect for the years in
issue, and all Rule references are to the Tax Court Rules of
Practice and Procedure.
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