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discretion to deny relief under section 6015(f) in an addition to
tax or penalty situation when on an individual basis the putative
innocent spouse meets the statutory standard generally applied to
all taxpayers that shows the addition to tax or penalty is
inapplicable.
Given the facts and circumstances in this case, to hold
petitioner liable for the entire section 6662(a) penalty would be
inequitable. Consequently, we hold that respondent abused his
discretion in failing to grant petitioner innocent spouse relief
from the section 6662(a) penalty as it relates to the
understatement regarding the omitted retirement distribution
proceeds. However, we conclude that respondent did not abuse his
discretion in failing to grant petitioner innocent spouse relief
from the section 6662(a) penalty as it relates to the
understatement regarding the omitted interest income. Petitioner
knew of that income, and the record is devoid of any reason for its
omission. Consistent with these conclusions, the parties should
determine the exact amount of the section 6662(a) penalty due in
their Rule 155 calculation.
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