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1. Respondent’s Justification as to the Asserted 1990
Deficiency
Respondent had a reasonable basis in law and fact for
concluding that petitioner and Theron were jointly liable for a
deficiency as determined in the notice of deficiency for taxable
year 1990. Theron had admitted that he had unreported income in
1990 as determined in the criminal net worth computation. As we
stated in Livingston v. Commissioner, T.C. Memo. 2000-121,
Theron’s admission was strong evidence of the validity of the
1990 criminal net worth computation and consequently of the 1990
civil net worth computation, upon which the 1990 deficiency
determination was predicated.
2. Respondent’s Justification as to Denial of Petitioner’s
Claim for Relief From Joint Liability
a. Period Before Repeal of Former Section 6013(e)
As described above, during the administrative proceedings
and throughout the trial of this case, the applicable statutory
provision for relief from joint liability was former section
6013(e), which was repealed shortly after the trial and replaced
by section 6015, effective July 22, 1998. See RRA sec. 3201(a),
(e)(1). Under former section 6013(e), to qualify for relief, a
taxpayer had to establish that: (1) A joint Federal income tax
return was filed; (2) there was a substantial understatement of
tax attributable to grossly erroneous items of the other spouse;
(3) in signing the return, the spouse seeking relief did not
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