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petitioner was not involved in Wee Ones Child Care, other than as
a handyperson, providing maintenance assistance to Ms. Moore.
His assistance to his former spouse in the initial funding and
his purchase of some supplies does not create a joint venture, as
suggested by respondent. Thus, we conclude that petitioner
satisfies section 6015(b)(1)(B).
The second of the three remaining elements of section
6015(b)(1) requires that petitioner, 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 be expected to know that the return
contained an understatement or that further investigation was
warranted.3 Butler v. Commissioner, supra at 283. In deciding
whether a spouse has reason to know of an understatement, we
undertake a subjective inquiry, and we recognize several factors
3 Secs. 1.6015-2 and 1.6015-3, Income Tax Regs., do not
apply to the present case because petitioner’s request for relief
was filed before the regulation’s effective date of July 18,
2002. See sec. 1.6015-9, Income Tax Regs. Nevertheless,
application of those regulations to the present case would yield
the same result, that is, petitioner did not know or have reason
to know of the understatement of tax attributable to the Schedule
C deductions of Wee Ones Child Care.
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