-12- prevent innocent spouse relief. Bokum v. Commissioner, 94 T.C. 126, 138-139 (1990), affd. 992 F.2d 1132 (11th Cir. 1993). MPM Income We first consider Mrs. Marzullo's entitlement to relief with respect to the understatement resulting from the understated income of MPM. Respondent concedes the first statutory requirement--that a joint return was filed--was satisfied.2 The second requirement is that the understatement is "attributable" to the income of the other spouse (in this case, Mr. Marzullo). Respondent asserts that the understatement resulting from the entire understated income of MPM should be attributable to Mrs. Marzullo, claiming that MPM should be viewed as a sole proprietorship, with Mrs. Marzullo the proprietor. As would be expected, petitioners disagree with respondent's position, asserting instead that the corporate identity of MPM should be respected for tax purposes. Further, petitioners counter respondent's argument by claiming that all the unreported income of MPM should be attributable to Mr. Marzullo because he had an ownership interest in MPM and was the one who intentionally understated MPM's gross receipts and net profits. While we agree with respondent's position that MPM's unreported income (the grossly erroneous item) should be 2 Although petitioners claim that Mrs. Marzullo did not sign the 1986 and 1987 tax returns, they do not disclaim the fact that those returns are in fact joint returns.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
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