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they appointed Mr. Hoyt to act on their behalf with regard to
partnership matters and reaffirmed their prior debt assumption
agreement with the Hoyt partnership.
Petitioner and Mr. Owen filed joint Federal income tax
returns for 1982 through 1996 on which they claimed substantial
losses and an investment credit related to their DGE investment.
The DGE deductions and credits claimed by the Owens significantly
reduced their taxable income and overall Federal income tax
liabilities for 1982 through 1996. As a result of our decision
in Shorthorn Genetic Engg. 1982-2, Ltd. v. Commissioner, T.C.
Memo. 1996-515, on July 18, 1997, petitioner and Mr. Owen entered
into a closing agreement with respondent concerning the tax
consequences of the DGE investment, which resulted in income tax
deficiencies for 1982 through 1995.3
On April 29, 2000, Mr. Owen died. On or about July 21,
2000, petitioner submitted Form 8857, Request for Innocent Spouse
Relief (And Separation of Liability and Equitable Relief), on
which she requested relief from joint and several liability for
1982 to 1997. Petitioner attached a supporting statement to the
request in which she represented that she was not involved in the
DGE investment and did not financially benefit from it.
Petitioner argued that she met each requirement of section
3Under the closing agreement, petitioners were not liable
for any deficiencies in income tax for 1996 or 1997.
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