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J. Nathan, and Ronald Mamrosh. The complaint alleged breach of
contract and negligence relating to the accountants’ preparation
of the 1989 and 1990 tax returns of Mary Catherine and the
Pierces. The suit was settled on January 28, 1999, for $900,000.
Richard Weinstein, attorney for the plaintiffs, received $135,000
as his fee, and $1,217.87 was paid as costs to the arbitrator/
mediator. In a signed agreement, Sethco was assigned the
potential proceeds of litigation in return for paying litigation
costs. The net proceeds of $763,782.13 were paid to Sethco
pursuant to the assignment agreement.
OPINION
The primary issue we consider is whether petitioner is
eligible for relief from joint and several liability. Section
6015(b)(1) provides for spousal relief from joint and several
liability if the following requirements are met:
(A) a joint return has been made for a taxable
year;
(B) on such return there is an understatement of
tax attributable to erroneous items of 1 individual
filing the joint return;
(C) the other individual filing the joint return
establishes that in signing the return he or she did
not know, and had no reason to know, that there was
such understatement;
(D) taking into account all the facts and
circumstances, it is inequitable to hold the other
individual liable for the deficiency in tax for such
taxable year attributable to such understatement; and
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