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spouse seeks relief within 2 years of the first collection
activity relating to the liability; and, taking into account all
the facts and circumstances, it is inequitable to hold the spouse
seeking relief liable for the deficiency in tax attributable to
the understatement. Sec. 6015(b)(1).
Section 6015(c) permits a requesting spouse to seek relief
from joint liability and elect to allocate a deficiency to a
nonrequesting spouse if the following conditions are met: A
joint return was filed; at the time of the election, the
requesting spouse was separated or divorced from the
nonrequesting spouse; the requesting spouse sought relief within
2 years of the first collection activity relating to the
liability; and the requesting spouse did not have actual
knowledge, at the time of signing the joint return, of the item
giving rise to the deficiency. Sec. 6015(c)(3).
Mr. Bracy did not tell petitioner the amount of the
distribution. She did, however, sign the return (i.e., which did
not report the IRA distribution) after Mr. Bracy told her he had
withdrawn funds from his IRA. Thus, she had actual knowledge of
the understatement as well as actual knowledge of the item (i.e.,
Mr. Bracy’s withdrawal from his IRA) that gave rise to the
deficiency. See Cheshire v. Commissioner, 115 T.C. 183, 195
(2000) (stating that the knowledge standard for purpose of
section 6015(c)(3)(C) is an actual and clear awareness of the
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Last modified: November 10, 2007