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alerted to the possibility of a substantial understatement.”
Flynn v. Commissioner, 93 T.C. 355, 365 (1989).
Petitioner’s educational and business backgrounds were not
made part of the record; nonetheless, the Court is not convinced
that her failure to inquire was reasonable. She and her former
spouse signed the return, and Mr. Lathrop’s unreported items of
income were more than one-half of the taxable income they
received that year.5 Even a cursory review of the return would
have revealed that Mr. Lathrop completely omitted the nonemployee
compensation he received, causing a substantial portion of their
taxable income to be unreported. For the reasons discussed
above, petitioner is not entitled to relief under section
6015(b).
Section 6015(c) affords proportionate relief to the
requesting spouse through allocation of the tax items to the
responsible party. Generally, this avenue of relief allows a
spouse to elect to be treated as if a separate return had been
filed. Rowe v. Commissioner, T.C. Memo. 2001-325. To be
eligible for relief under section 6015(c), the requesting spouse
must be no longer married to, be legally separated from, or have
lived at least 12 months apart from the individual with whom the
5Petitioner and Mr. Lathrop reported $11,949 of taxable
income for 2000. They should have reported $24,544 of taxable
income ($3,999 of unemployment compensation plus $9,250 of
nonemployee compensation less a $654 self-employment tax
deduction).
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