Ruthe G. Ohrman - Page 16

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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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