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(c) Spouse Relieved of Liability in Certain Other
Cases.–-Under regulations prescribed by the Secretary, if-–
(1) an individual does not file a joint return for
any taxable year,
(2) such individual does not include in gross
income for such taxable year an item of community
income properly includible therein which, in accordance
with the rules contained in section 879(a), would be
treated as the income of the other spouse,
(3) the individual establishes that he or she did
not know of, and had no reason to know of, such item of
community income, and
(4) taking into account all facts and
circumstances, it is inequitable to include such item
of community income in such individual’s gross income,
then, for purposes of this title, such item of community
income shall be included in the gross income of the other
spouse (and not in the gross income of the individual).
Under procedures prescribed by the Secretary, if, taking
into account all the facts and circumstances, it is
inequitable to hold the individual liable for any unpaid tax
or any deficiency (or any portion of either) attributable to
any item for which relief is not available under the
preceding sentence, the Secretary may relieve such
individual of such liability.
Petitioner’s request for relief relies on the last sentence
of section 66(c). This provision generally applies to any
liability for tax arising after July 22, 1998, and any liability
for tax arising on or before such date but remaining unpaid as of
such date. See H. Conf. Rept. 105-599, at 251 (1998), 1998-3
C.B. 145, 200. The deficiencies at issue arose prior to July 22,
1998, but remain unpaid.
We have the authority to review respondent’s denial of
equitable relief under the last sentence of section 66(c). Beck
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