CALIFORNIA FAMILY LAW
...Income Tax Matters
......Tax Returns/Rates
.........Innocent Spouse Rule-Jt. Return
............Relief Granted
11 Cards On This Topic:
  • Where W could demonstrate innocence as to a portion of H's substantial tax understatement, apportionment under innocent spouse statute appropriate.
  • W had reason to know of substantial understatement of tax from multiple sources; factors considered in determining reasonableness.
  • Negative income does not, as matter of law, put reasonable person on notice that reported income has been understated; focus is on extent family expenditures exceed reported income.
  • W held to be innocent spouse despite her actual knowledge of erroneous deductions. Test stated.
  • Mere knowledge of existence of deduction, which happens to be erroneous, does not bar innocent spouse relief; standards for omission and erroneous deduction relief different.
  • Standard to determine if taxpayer had "reason to know" of substantial understatement.
  • As W2 satisfied safe harbor conditions in Rev. Proc. 2000-15, sec. 4.02, determination that she did not qualify for innocent spouse relief per IRC 6015(f) was abuse of discretion.
  • Although W qualifies as innocent spouse for income she did not know about, she does not for income that passed through her hands.
  • Where parties have very high std of living and amt of understatement relatively small, such that W would not have noticed, innocent spouse criteria satisfied; in determined equities, court may consider future hardship on applying spouse.
  • W held not to be on notice nor to have benefited when H's misappropriated funds merely maintained their normal lifestyle; parties still married.
  • Tests to determine if reasonably prudent person could be expected to know of omission.