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regarding joint return and timely election under section
6015(b)(1)(A) and (E), respectively. Additionally, the
parties stipulated that the employee business expenses at issue
are attributable to Mr. Applegate's employment with DriAll.
Thus, Ms. Wang has also satisfied the requirement that the
understatement of tax resulting from the disallowed employee
business expenses must not be attributable to the individual
seeking relief from the liability. Sec. 6015(b)(1)(B). The
Court now considers whether Ms. Wang satisfies the remaining two
elements of section 6015(b) with respect to the Schedule A
deductions for unreimbursed employee business expenses.
The first of the two remaining elements of section
6015(b)(1) requires that Ms. Wang, in signing the return, did not
know, and had no reason to know, that there was an
understatement. See Grossman v. Commissioner, 182 F.3d 275, 279-
280 (4th Cir. 1999), affg. T.C. Memo. 1996-452. A requesting
spouse has knowledge or reason to know of an understatement if he
or she actually knew of the understatement, or if a reasonably
prudent taxpayer in his or her position, at the time he or she
signed the return, could have been expected to know that the
return contained an understatement or that further investigation
was warranted. Butler v. Commissioner, supra at 283. In
deciding whether a spouse has reason to know of an
understatement, the Court undertakes a subjective inquiry. There
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