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with Chinese speakers, and we infer from the evidence and
observation during trial that the Chens simply worked together in
Chinese. We find that Mrs. Chen knew exactly what she was doing
when she wrote Mr. Chen a $50,000 check to cover some of his
gambling debts. The regulations direct us to look, not at
whether a spouse requesting relief knows specifically of the
understatement (as the Chens argue), but at whether “the
requesting spouse had actual knowledge of an erroneous item.”
Sec. 1.6015-3(c)(2)(i), Income Tax Regs., incorporated by sec.
1.6015-2(c), Income Tax Regs. The regulation specifically
directs us to look at whether the spouses “jointly owned the
property that resulted in the erroneous item,” sec. 1.6015-
3(c)(2)(iv), Income Tax Regs., and the situation here is even
more egregious since Mrs. Chen had sole power and control of the
fake Beam account.
We therefore conclude, after considering all these facts and
circumstances, that Mrs. Chen knew of Mr. Chen’s fraud when she
signed the joint tax return for 1998. She is not entitled to
relief under subsection (b).
B. Section 6015(f) Relief
Mrs. Chen also argues for relief under subsection (f),
arguing that it would be inequitable to hold her liable for the
unpaid tax.4 Rev. Proc. 2003-61, 2003-2 C.B. 296,5 sets out
4 Our jurisdiction to review Mrs. Chen’s claim for
(continued...)
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