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Section 6015(b)(1)(C) requires that in signing the return
the individual seeking relief did not know and had no reason to
know of the understatement. Relief under section 6015(b) is not
provided to a spouse who turned a blind eye to facts that were
available. Charlton v. Commissioner, 114 T.C. 333, 340 (2000).
Petitioner claims that there was no entry made on line 15a,
Total IRA Distributions, of the 1999 Form 1040 she signed.
Petitioner asserts that the 1999 tax return her former spouse
presented to her reflected a greater Schedule C business profit
than the amount as actually filed with the IRS. Petitioner
alleges that her former spouse inflated the financial performance
of her business so that he would not have to work and that he
surreptitiously withdrew funds from his IRA to support the
deception.
Petitioner suggests that her former spouse so controlled the
financial details of her business that she was unaware of whether
or not the business was profitable and whether the income
therefrom could support the family.5 Petitioner also suggests
that she was unaware that Mr. Kunsman withdrew more than $80,000
between 1999 and 2000 in order to provide for financial
obligations of the family and of her business. The Court is not
5 The 1999 Schedule C, Profit or Loss From Business,
reported gross receipts of $281,326.94 and net profit of
$4,450.11. Petitioner testified that she knew the gross receipts
were about $300,000 but that her former spouse led her to believe
the profits from the business were between $20,000 and $30,000.
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