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share of earnings. Under this section, the requesting
spouse must establish certain conditions before a (sic)
relief can be granted. Even if you meet the
requirements for being a widow, you (sic) request for
separation of liability will not be granted because you
had actual knowledge and the reason to know of the
items giving rise to the deficiency that were allocable
to your spouse. [Emphasis supplied.]
Petitioner submitted a timely petition contesting
respondent’s determination, which we filed on December 9, 2002.
In her petition, petitioner alleged, in pertinent part, that
respondent erred in concluding that petitioner did not qualify
for relief under section 6015(c) and that “Respondent made no
effort to prove, and failed to prove, that Petitioner had actual
knowledge of the factual circumstances which made the tax items
unallowable as a deduction.” As she did with her administrative
request for relief under section 6015(c), petitioner included an
extensive recitation of the facts on which she relied in support
of her allegation, including the following:
6.p. Neither Petitioner nor Mr. Foy had actual
knowledge of the underlying problems with the
transactions, nor could they have discovered that
Jay Hoyt failed to transfer title to livestock to
the partnership and that he was otherwise
converting partnership assets.
* * * * * * *
6.q. Due to the complexity of Jay Hoyt’s fraud, it was
impossible for either Petitioner or Mr. Foy to
discover the true nature of the transactions.
6.r. Mr. Foy and all of the Hoyt investors were
deceived by Jay Hoyt as to the nature of their
investment and were ultimately determined by a
court of law to be victims of his elaborate fraud.
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