Russell Whiting Packer - Page 6

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                   individual liable for the deficiency in tax for                    
                   such taxable year attributable to such                             
                   understatement; and                                                
                          (E) the other individual [makes a valid                     
                   election] * * *.                                                   
              Respondent concedes that petitioner has satisfied the                   
         requirements under subparagraphs (A), (B), and (E) of section                
         6015(b)(1).  At issue are the requirements under subparagraphs               
         (C) and (D) of section 6015(b)(1).                                           
              Under section 6015(b)(1)(C), the requesting spouse must                 
         establish that in signing the return, he or she did not know or              
         had no reason to know of the understatement.  A requesting spouse            
         has knowledge or reason to know of an understatement if he                   
         actually knew of the understatement, or if a reasonably prudent              
         taxpayer in his position, at the time he signed the return, could            
         be expected to know that the return contained an understatement              
         or that further investigation was warranted.  Mora v.                        
         Commissioner, 117 T.C. 279, 287 (2001); Butler v. Commissioner,              
         supra at 283; see sec. 1.6015-2(c), Income Tax Regs.                         
              Petitioner agrees that he knew Ms. Valentine received a                 
         distribution from her 401(k) account in 1999.  Petitioner,                   
         however, contends that he did not know that there was an                     
         understatement of tax on the 1999 return, because he was not                 
         aware that the distribution would be subject to a 10-percent                 
         additional tax under section 72(t).                                          

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