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During the latter part of 1996, intervenor received $68,648
in a distribution from Ms. Carlin’s section 401(k) retirement
account. Intervenor also received proceeds from the sale of Ms.
Carlin’s home in Florida.
Petitioner and intervenor filed their 1996 joint Federal tax
return timely. On the return, they reported total income of
$42,926 but included only $5,220 in gross pension income and $220
in taxable pension income. Respondent issued a Notice Proposing
Changes (CP-2000) on September 26, 1998, to petitioner and
intervenor stating: “information reported on their return did
not match what was reported by their employers, banks, and/or
other payers.” Intervenor did not respond to this notice. On
March 8, 1999, petitioner filed Form 8857, Request for Innocent
Spouse Relief. It was subsequently denied.
On April 12, 2000, respondent issued a notice of deficiency
to petitioner and intervenor for their 1996 tax. Respondent
determined petitioner and intervenor underreported the wages from
Show Tech Support, Inc., and pension income paid to intervenor
and failed to report nonemployee compensation paid to intervenor
from ACC Productions, Inc. The entire deficiency was based on
the payments made to intervenor, as noted on the various Forms
1099. A timely petition was filed in this Court in the names of
both intervenor and petitioner. Because the petition was
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