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These requirements are expressed in the conjunctive, and
thus, a requesting spouse must satisfy all requirements of
section 6015(b)(1). Subparagraphs (A), (B), and (E) are not in
dispute. The parties disagree only as to whether Ms. Skoller
satisfies the requirements of subparagraphs (C) and (D).
Subparagraph (C) requires that the requesting spouse “not
know, and [have] no reason to know, that there was [an]
understatement” of tax. Sec. 6015(b)(1)(C). There are two
aspects of section 6015(b)(1)(C).5 First, “where a spouse
seeking relief has actual knowledge of the underlying transaction
* * * innocent spouse relief is denied.” Cheshire v.
Commissioner, 115 T.C. 183, 192-193 (2000), affd. 282 F.3d 326
(5th Cir. 2002). For purposes here, we are willing to assume
that Ms. Skoller did not have actual knowledge of the underlying
transaction.
Nonetheless, she must still satisfy the second prong of
section 6015(b)(1)(C). A requesting spouse has reason to know of
5 As part of the Internal Revenue Service Restructuring and
Reform Act of 1998, Pub. L. 105-206, sec. 3201(a), 112 Stat. 734,
Congress repealed sec. 6013(e) and enacted sec. 6015(b). The
language of sec. 6015(b)(1)(C) is similar to the language in
former sec. 6013(e)(1)(C). Both provisions require that the
requesting spouse “did not know, and had no reason to know” that
there was an understatement of tax. H. Conf. Rept. 105-599,
supra at 249, 1998-3 C.B. at 1003. Accordingly, the caselaw
interpreting the language under sec. 6013(e) will be applied in
interpreting the same language under sec. 6015(b). Butler v.
Commissioner, 114 T.C. 276, 283 (2000).
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