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Petitioner’s use of State family law as a vehicle to lend
legitimacy to Mr. Ohrman’s transfer of assets and income to her
is the type of abuse that Congress expressly intended to stop by
adding paragraph (4) to section 6015(c). While the State of
Oregon’s equitable distribution rules provided the mechanism for
the transfer of Mr. Ohrman’s assets and income to petitioner,
they do not negate the principal purpose for which the transfer
occurred, the avoidance of tax. As discussed in detail above,
the separation agreement was a way for petitioner to enjoy the
benefits of the family assets and income without satisfying the
1999 tax deficiency. Accordingly, we hold that petitioner
received a transfer of disqualified assets under section
6015(c)(4).
The next step in the section 6015(c) analysis is to decide
the amount by which petitioner’s liability for the 1999 tax
deficiency should be increased because of the transfer of
disqualified assets. Under section 6015(c)(4)(A), the portion of
the deficiency for which petitioner is liable is increased by the
value of the disqualified assets that were transferred to her.
In this case, petitioner’s portion of the 1999 tax deficiency
would have been zero absent the transfer of disqualified assets
because of her eligibility to make an election to limit her
liability under section 6015(c)(3). The value of the
disqualified assets petitioner received, however, far exceeds
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