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not know and had no reason to know that the liability would not
be paid is a factor weighing in favor of granting relief. Rev.
Proc. 2003-61, sec. 4.03(2)(a)(iii). By contrast, the fact that
the requesting spouse knew or had reason to know that the
reported liability would go unpaid is a factor weighing against
relief. Id.
The examiner determined that petitioner did not satisfy this
condition in favor of granting relief because petitioner did not
have a reasonable belief that any portion of the underpayments
would be paid at the time she signed the returns. Petitioner
stipulated that at the time she signed the 1992, 1993, 1994,
1995, 1996, 1997, and 1998 Forms 1040, she knew there were
balances due for each of the tax years and she knew that the
balances due would not be paid because she and Mr. Griffin were
in bankruptcy and had no funds with which to pay the taxes.
Thus, we find that petitioner knew or had reason to know that the
reported liabilities would not be paid. This factor favors
denying relief to petitioner.
3. Requesting Spouse’s Legal Obligation
Petitioner’s divorce decree specifically states:
[petitioner and Mr. Griffin] shall be equally responsible
for all federal income tax liabilities of the parties from
the date of marriage through December 31, 2001, and each
party shall timely pay 50 percent of any deficiencies,
assessments, penalties, or interest due thereon and shall
indemnify and hold the other party and his or her property
harmless from 50 percent of such liabilities unless such
additional tax, penalty, and/or interest resulted from a
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