- 23 -23
substantial understatement of tax attributable to grossly erroneous
items of the other spouse; (3) in signing the return, the spouse
seeking relief did not know, and had no reason to know, of the
substantial understatement; and (4) under the circumstances it
would be inequitable to hold the spouse seeking relief liable for
the understatement. Sec. 6013(e). The spouse seeking relief bears
the burden of proving that each of the four elements of the statute
has been satisfied, and failure to prove any one of the elements
will prevent innocent spouse relief. Bokum v. Commissioner, 94
T.C. 126, 138-139 (1990), affd. 992 F.2d 1132 (11th Cir. 1993).
Respondent concedes that a joint return was filed for each of
the years in issue, and thus the first element is not disputed.
The innocent spouse issue can be disposed of on the third and
fourth elements.
a. Knowledge of Understatement
Mrs. Zaban asserts that she did not know, nor had reason to
know, of the substantial understatement of tax on the joint return
for each of the years in issue. Respondent contends that Mrs.
Zaban knew or should have known about the unreported income items
for 1986 through 1989 and knew or should have known about the
$98,000 deduction for forfeited funds for 1990.
To obtain innocent spouse relief for tax liabilities that
arise from omissions of income, the spouse seeking such relief must
Page: Previous 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 NextLast modified: May 25, 2011