- 17 -
1989, affg. T.C. Memo. 1988-63.4 The standard to be applied is
whether a “reasonably prudent taxpayer under the circumstances of
the [requesting] spouse at the time of signing the return could
be expected to know that the tax liability stated was erroneous
or that further investigation was warranted.” Stevens v.
Commissioner, supra at 1505; Bokum v. Commissioner, 94 T.C. 126,
148 (1990), affd. on other issues 992 F.2d 1132 (11th Cir. 1993).
This standard applies to deductions as well as income matters.
Stevens v. Commissioner, supra at 1505 n.8; Bokum v.
Commissioner, supra at 148.5
4 Kistner v. Commissioner, 18 F.3d 1521, 1525-1527 (11th
Cir. 1994), revg. and remanding T.C. Memo. 1991-463, and Stevens
v. Commissioner, 872 F.2d 1499, 1505 (11th Cir. 1989), affg. T.C.
Memo. 1988-63, involved former sec. 6013(e)(1)(C) rather than
current sec. 6015(b)(1)(C). The language of both provisions,
however, is roughly the same. See Mora v. Commissioner, 117 T.C.
279, 286 n.7 (2001).
5 Some of the Courts of Appeals have adopted a more lenient
approach than the Tax Court in deduction cases where a requesting
spouse knows of the transaction that gave rise to the
understatement. See Jonson v. Commissioner, 118 T.C. 106, 115-
116 (2002), affd. 353 F.3d 1181 (10th Cir. 2003). The Court of
Appeals for the Eleventh Circuit appears not to have squarely
decided this issue of which approach it will adopt for deduction
cases. See Kistner v. Commissioner, supra at 1527 (noting
favorably cases from other circuits adopting this more lenient
approach); Ferrarese v. Commissioner, 75 AFTR2d 95-524, 95-525,
95-1 USTC par. 50,038, at 87,139 (11th Cir. 1994), affg. per
curiam T.C. Memo. 1993-404. Because we believe that petitioner
has failed to meet her burden of showing she had no reason to
know of the 1979 deficiency under the more lenient approach, any
disparity between that more lenient approach and the Tax Court’s
approach is immaterial to our disposition of this case. See
Jonson v. Commissioner, supra at 116.
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