Nancy M. O'Neill, Petitioner, and Robert B. Wollow, Intervenor - Page 4

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          proceedings and informed respondent that the bankruptcy trustee             
          would retain “certain IRA monies” to pay the 1998 joint                     
          Payment of the 1998 Joint Liability                                         
               On petitioner’s separately filed 1999 Federal income tax               
          return, petitioner reported total wages in the amount of $80,100            
          and alimony in the amount of $29,700.  The return showed a refund           
          due in the amount of $5,021.  On September 4, 2000, respondent              
          applied petitioner’s 1999 refund to offset the 1998 joint                   
          liability.  At this time, petitioner’s IRA remained exempted from           
          the bankruptcy estate.  Petitioner did not submit signed                    
          instructions for liquidating the IRA and allocating the proceeds            
          until January 2001, several months after respondent applied                 
          petitioner’s 1999 refund to the 1998 joint liability.                       
          Petitioner’s Innocent Spouse Claim                                          
               On July 2, 2002, petitioner timely filed with respondent               
          Form 8857, Request for Innocent Spouse Relief.  In her Form 8857,           
          petitioner asserted that “Since the 1998 income tax liability is            
          a community liability, it is inequitable to apply [the]                     
          taxpayer’s separate property to its payment.  Community assets              
          which are still available in the bankruptcy estate should instead           
          be used.”  In a final notice dated August 14, 2002, respondent              

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