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approach to omission of income cases, certain of the Courts of
Appeals, beginning with the Court of Appeals for the Ninth
Circuit, have adopted what may be a more lenient approach to
deduction cases, which requires "a spouse seeking relief to
establish that she did not know and did not have reason to know
that the deduction would give rise to a substantial
understatement."7 See Price v. Commissioner, 887 F.2d 959, 963
(9th Cir. 1989), revg. an Oral Opinion of this Court; see also
Reser v. Commissioner, 112 F.3d 1258 (5th Cir. 1997), affg. in
part and revg. in part T.C. Memo. 1995-572; Resser v.
Commissioner, 74 F.3d 1528 (7th Cir. 1996), revg. and remanding
T.C. Memo. 1994-241; Kistner v. Commissioner, 18 F.3d 1521 (11th
Cir. 1994), revg. and remanding T.C. Memo. 1991-463; Hayman v.
Commissioner, 992 F.2d 1256, 1261 (2d Cir. 1993), affg. T.C.
Memo. 1992-228; Erdahl v. Commissioner, 930 F.2d 585, 589 (8th
Cir. 1991), revg. and remanding T.C. Memo. 1990-101. In Bokum v.
Commissioner, supra at 153, however, we declined to apply the
Price approach to deduction cases.8
7 The Internal Revenue Service Restructuring and Reform Act
of 1998, Pub. L. 105-206, sec. 1301, 112 Stat. 685, 734,
eliminated the requirement of former sec. 6013(e)(1)(C) that the
understatement be “substantial”.
8 Of course, under the rule established in Golsen v.
Commissioner, 54 T.C. 742 (1970), affd. 445 F.2d 985 (10th Cir.
1971), we are bound to defer to the decision of a Court of
Appeals squarely on point, where that Court of Appeals is the
likely venue for appeal.
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