Hale Exemption Trust - Page 3




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               In September 1998, Sylvia and respondent entered into a                
          stipulation resolving all issues with respect to Sylvia except              
          Sylvia’s entitlement to relief from joint liability on the joint            
          returns.  The settlement stated:  “Without considering the                  
          innocent spouse provisions of � 6013(e), there are deficiencies             
          in income tax due from Ms. Johnson for the taxable years 1979 and           
          1980 in the amounts of $44,017 and $21,657, respectively.”  The             
          stipulation further provided that Sylvia was not liable for                 
          additions to tax under section 6653(a) for 1979 and 1980.  It               
          further provided:                                                           
               Without considering the innocent spouse provisions of                  
               I.R.C. � 6013(e), $44,017 and $21,657 of the deficiencies              
               in tax due from Ms. Johnson for the taxable years 1979                 
               and 1980, respectively, are substantial underpayments                  
               attributable to tax motivated transactions, for purposes               
               of computing the interest payable with respect to such                 
               amounts, pursuant to I.R.C. � 6621(c).                                 

               On July 22, 1998, the RRA was enacted.  The statute, among             
          other things, revised and expanded the relief from joint                    
          liability available to spouses filing joint returns.  The                   
          relevant provisions of the RRA generally apply to any liability             
          for tax arising after July 22, 1998, and any liability for tax              
          arising on or before that date and remaining unpaid on that date.           
               On November 18, 1998, except for the provisions relating to            
          relief from joint liability, an identical stipulation was filed             
          in regard to the Hale Exemption Trust.                                      
               On May 1, 2000, the Court filed a second stipulation of                





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