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Nakasu would pay the tax reported thereon. See Ogonoski v.
Commissioner, T.C. Memo. 2004-52; Collier v. Commissioner, T.C.
Memo. 2002-144.
Petitioner conceded that at the time she signed each return,
she knew that remittances for the tax reported thereon would not
be included. In 1998, petitioner and Mr. Nakasu received a
discharge in bankruptcy. Petitioner was aware of their financial
difficulties. As a result, petitioner cannot establish that at
the time she signed each return it was reasonable for her to
believe that the tax would be paid or that she had no reason to
know that the tax reported thereon would not be paid. See, e.g.,
Banderas v. Commissioner, supra. This factor weighs against
relief. See Beatty v. Commissioner, T.C. Memo. 2007-167
(applying Rev. Proc. 2003-61 and finding that knowledge or reason
to know weighs against relief); Fox v. Commissioner, T.C. Memo.
2006-22 (same); cf. Levy v. Commissioner, T.C. Memo. 2005-92
(applying Rev. Proc. 2000-15 and stating that lack of knowledge
weighs in favor of relief while knowledge or reason to know
weighs against relief).
Nonrequesting Spouse’s Legal Obligation
The IRS will also consider whether the nonrequesting spouse
has a legal obligation to pay the outstanding income tax
liability pursuant to a divorce decree or agreement. See Rev.
Proc. 2003-61, sec. 4.03(2)(a)(iv), 2003-2 C.B. at 298. But if
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