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F. Whether Mrs. Reaves Qualifies as an Innocent Spouse
1. Background
Mrs. Reaves contends that she qualifies as an innocent
spouse under section 6013(e) for the constructive dividends
discussed above except for the John Chavis checks and the $10,197
of unreported income that she conceded that she had in 1986. She
contends that she qualifies as an innocent spouse as to all other
amounts at issue, including income that Mr. and Mrs. Reaves
conceded they received from the First Citizens accounts.
To qualify as an innocent spouse under section 6013(e), Mrs.
Reaves must prove: (a) She filed a joint return for the years in
issue; (b) there is a substantial understatement of income tax
attributable to grossly erroneous items of the other spouse on
the return; (c) she did not know or have reason to know of the
substantial understatement when she signed the return; and (d) it
would be inequitable to hold her liable for the deficiency
attributable to the substantial understatement. Sec. 6013(e)(1).
Failure to meet any of these requirements precludes a taxpayer
from qualifying as an innocent spouse. Sec. 6013(e)(1); Purcell
v. Commissioner, 826 F.2d 470, 473 (6th Cir. 1987), affg. 86 T.C.
228 (1986); Shea v. Commissioner, 780 F.2d 561, 565 (6th Cir.
1986), affg. in part and revg. in part T.C. Memo. 1984-310.
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