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Respondent’s failure to properly analyze petitioner’s
marital status under section 6015(c)(3)(A)(i)(I) and the actual
knowledge standard under section 6015(c)(3)(C) is not the only
defect in respondent’s litigating position, however. If
respondent had made any reasonable effort to make an allocation
under section 6015(c) consistent with his position that
petitioner and Mr. Bulger’s investment in SGE was a joint
investment, he would necessarily have allocated the Hoyt
partnership items between petitioner and Mr. Bulger in accordance
with their respective ownership interests. If respondent had
actually made a calculation before adopting his litigating
position, he would have realized that petitioner was entitled to
at least some relief under section 6015(c). If respondent had
conceded in his answer that petitioner was entitled to section
6015(c) relief, the concession might have enabled the parties to
settle this case at a much earlier date.18
18Although respondent’s calculation would not have arrived
at the same tax liability numbers as those reflected in the
settlement because of respondent’s interpretation of sec.
6015(d)(3)(B), see Hopkins v. Commissioner, 121 T.C. 73 (2003),
the computation would nevertheless have confirmed that petitioner
was entitled to sec. 6015(c) relief. When our Opinion in
Hopkins, rejecting respondent’s interpretation of sec.
6015(d)(3)(B), was filed on July 29, 2003, respondent had reason
to know that the application of the tax benefit rule of sec.
6015(d)(3)(B) might increase the relief available to petitioner
under sec. 6015(c). If respondent had revised his calculation at
that time (approximately 3 months after his answer was filed), he
would have arrived at the same allocation of tax liabilities
reflected in the settlement.
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