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the requirements for equitable relief set forth in section
6015(b)(1) and is entitled to relief from joint and several
liability for the joint 1999 return.
Section 6015(b)(1)(C) requires that the requesting spouse
establish that in signing the return she did not know, and had no
reason to know, that there was an understatement. The parties
have stipulated that petitioner did not have actual knowledge of
the understatement at the time she signed the joint 1999 return.
In deciding whether petitioner has carried her burden of proof in
establishing that she had no reason to know of the understatement
in the joint 1999 return, witness credibility is an important
consideration. See Penfield v. Commissioner, T.C. Memo. 2002-
254; Ishizaki v. Commissioner, T.C. Memo. 2001-318. In this
case, as discussed below, various inconsistencies in the
assertions of petitioner and Mr. Ohrman undermine the reliability
of their generalized assertions that petitioner had no reason to
know of the withdrawals from the Dean Witter account. Therefore,
we are not required to accept them. See Geiger v. Commissioner,
440 F.2d 688 (9th Cir. 1971), affg. T.C. Memo. 1969-159.
Petitioner believed that there was approximately $700,000 in
the Dean Witter account at one point in 1998. In an effort to
protect this amount, she solicited promises from Mr. Ohrman
before and during 1999 that he would not use any of the funds in
the Dean Witter account for gambling. Petitioner was aware of
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