Cheryl McKnight - Page 16

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                    (1) The joint tax return contains an                              
               understatement of tax attributable to the spouse not                   
               requesting relief;                                                     
                    (2) the spouse seeking relief establishes that in                 
               signing the return he or she did not know, and had no                  
               reason to know, that there was such a tax                              
                    (3) taking into account all the facts and                         
               circumstances, it would be inequitable to hold the                     
               spouse requesting relief liable for the tax deficiency                 
               related to such a tax understatement; and                              
                    (4) the spouse requesting relief timely elects the                
               benefit of section 6015(b).                                            

               Under section 6015(b), a requesting spouse is regarded as              
          knowing or as having reason to know of a tax deficiency if the              
          spouse was aware of the transactions or items that gave rise to             
          the tax deficiency or had reason to know that a deduction would             
          give rise to an understatement of tax.  Purcell v. Commissioner,            
          826 F.2d 470, 473-474 (6th Cir. 1987), affg. 86 T.C. 228 (1986);            
          Jonson v. Commissioner, 118 T.C. 106, 115 (2002), affd. 353 F.3d            
          1181 (10th Cir. 2003).                                                      
               Under section 6015(c), relief from joint liability for a               
          Federal income tax deficiency is available if the following                 
          conditions, among others, are satisfied:                                    

                    (1)  At the time the election of section 6015(c)                  
               is filed, the two spouses are divorced, legally                        
               separated, or otherwise have been living apart for the                 
               preceding 12 months; and                                               
                    (2)  the requesting spouse, at the time the return                
               was signed, did not have actual knowledge of the items                 
               giving rise to the deficiency.                                         

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