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relief, the requesting spouse must establish that in signing the
return, he or she “did not know, and had no reason to know” of
the understatement. Sec. 6015(b)(1)(C), (2). Ms. Lewallen does
not satisfy the applicable statutory requirements.
Where a spouse seeking relief from joint and several
liability has actual knowledge of the underlying transaction that
produced the omitted income, relief is unavailable. See sec.
6015(b)(1)(C); Cheshire v. Commissioner, 115 T.C. 183, 192-193
(2000), affd. 282 F.3d 326 (5th Cir. 2002). Ms. Lewallen had
actual knowledge of the item of income omitted from the 2004
return attributable to Mr. Munsinger, namely, his employment with
Progress Rail Services. Therefore, petitioner is not entitled to
relief under section 6015(b).3
2. Relief Under Section 6015(c)
Section 6015(c) allows proportionate tax relief (if a timely
election is made) through allocation of the deficiency between
individuals who filed a joint return and are no longer married,
are legally separated, or have been living apart for a 12-month
period. Generally, this avenue of relief allows a spouse to
elect to be treated as if a separate return had been filed. Rowe
3 Further, the items that were omitted from petitioners’
2004 Federal income tax return giving rise to the understatement
included income items attributable to Ms. Lewallen herself; it
would not be inequitable to hold her liable for the
understatement attributable to her omitted income. See sec.
6015(b)(1)(D).
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Last modified: November 10, 2007