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Availability of Relief to Petitioner
For the reasons that follow, we conclude that petitioner is
not entitled to innocent spouse relief except to the extent
provided below.
A. Relief Under Section 6015(b)
Neither party disputes that in this case the requirements of
subparagraphs (A), (B), and (E) of section 6015(b)(1) have been
satisfied.4 Their dispute involves whether the requirements of
subparagraphs (C) and (D) of section 6015(b)(1) have been met.
Section 6015(b)(1)(C) contains a no “knowledge of the
understatement” requirement. Petitioner maintains that the
standard of inquiry to be used in determining whether the putative
innocent spouse knew, or had reason to know of, an understatement
of tax is whether, at the time the return was signed, a reasonably
prudent taxpayer in the spouse’s position could be expected to know
that the stated tax liability was erroneous or that further
investigation was warranted. Based on this standard, petitioner
posits that even though she knew of the retirement distributions
and the interest income, she did not know that there was an
understatement of tax on the 1992 return.
4 Respondent has not objected to the manner in which
petitioner has raised a claim for innocent spouse relief under
sec. 6015. We thus treat the raising of innocent spouse relief
in the petition as a timely filed election. See Butler v.
Commissioner, 114 T.C. 276, 281-282 (2000); Charlton v.
Commissioner, 114 T.C. 333, 339 (2000).
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