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liability for the deficiency. Section 6015 allows relief from
joint and several liability on three grounds: subsection (b)
lets a spouse seek relief if she can show that she neither knew,
nor had reason to know, of an understatement on the return;
subsection (c) lets divorced or separated spouses split their tax
liability; and subsection (f) allows relief where “it is
inequitable to hold the individual liable for any unpaid tax or
any deficiency (or any portion thereof).”
Mrs. Chen’s first problem is section 1.6015-1(d), Income Tax
Regs., applicable to all these subsections. It provides:
If the Secretary establishes that a spouse
transferred assets to the other spouse as
part of a fraudulent scheme, relief is not
available under section 6015 * * *. For
purposes of this section, a fraudulent scheme
includes a scheme to defraud the Service or
another third party * * *
We hold that this section alone supports the Commissioner’s
refusal to grant Mrs. Chen innocent spouse relief under any
subsection of section 6015--Mrs. Chen admitted, after all, to
helping to defraud Chubb, “another third party.”
As alternative grounds, however, we discuss each of the two
subsections that Mrs. Chen relies on.
A. Section 6015(b) Relief
Section 6015(b) requires, among other elements, the spouse
asking for relief to prove that “in signing the return, * * *
[she] did not know, and had no reason to know, that there was
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