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petitioner knew, or had reason to know, about Mr. Bennett’s wages
of $40,054.
Similarly, in regard to her share of the $4,834 of taxable
interest, petitioner was aware that the couple had joint bank
accounts. As a result, petitioner knew, or had reason to know,
of the taxable interest income.
With regard to her share of the remaining $12,250 of
unidentified community income, we do not have enough information
to evaluate whether petitioner knew or had reason to know of this
income. Therefore, for purposes of section 66(c)(3), petitioner
has not established that she did not know, and had no reason to
know, of the unidentified income.
Accordingly, we hold that she is not entitled to relief from
any of the items of community income reported on Mr. Bennett’s
return under section 66(c)(3).
IV. Equitable Relief Under the Flush Language of Section 66(c)
The flush language of section 66(c) provides:
Under procedures prescribed by the Secretary, if,
taking into account all the facts and circumstances, it
is inequitable to hold the individual liable for any
unpaid tax or any deficiency (or any portion of either)
attributable to any item for which relief is not
available under the preceding sentence, the Secretary
may relieve such individual of such liability.[11]
11 The flush language providing equitable relief was added
to sec. 66(c) as part of the Internal Revenue Service
Restructuring and Reform Act of 1998, Pub. L. 105-206, sec. 3201,
112 Stat. 734, the same section of the same legislation that
(continued...)
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