Printer Friendly

Innocent-spouse relief can be granted as to Form 1045.

The Friedmans filed joint tax returns for 1981, 1982 and 1983. On their 1983 return, they reported a $900,000 loss from an equipment-leasing transaction. They filed a joint Form 1045, "Application for Tentative Refund," to carry back the remaining unused $800,000 net operating loss (NOL) from 1983 to 1981 and 1982.

The IRS determined deficiencies for 1981 through 1985, due mostly to disallowance of losses from the same equipment-leasing transaction. The Friedmans later conceded the deficiencies (and penalties) but claimed Mrs. Friedman was entitled to innocent-spouse relief for each year involved. The IRS argued no such relief was available for 1981 and 1982 because there was no "return" on which a deficiency was asserted--only form 1045. (Those years were included in the deficiency only because of the NOL carryback; no deficiency was asserted as to the original joint returns for those years.)

IRC section 6013(e) allows relief from liability for an innocent spouse for substantial understatements attributable to grossly erroneous items of the other spouse on a joint return. The IRS argued form 1045 was merely an application, not a return within the meaning of section 6013(e).

Result: Innocent-spouse relief was available for 1981 and 1982. The Tax Court adopted a broad definition of return for this purpose--one that includes documents, such as the 1045, amending the original return.

Friedman, 97 TC No. 42.
COPYRIGHT 1992 American Institute of CPA's
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

Article Details
Printer friendly Cite/link Email Feedback
Publication:Journal of Accountancy
Article Type:Brief Article
Date:Feb 1, 1992
Previous Article:IRS copying papers was unconstitutional.
Next Article:Deducting buyback costs.

Related Articles
Innocent spouse relief: liberalization of the lack of knowledge requirement.
Protecting innocent spouses.
Increased protection for innocent spouses.
The Tax Court's enhanced power to help innocent spouses.
Joint return required for equitable innocent spouse relief.
Are tax indemnity payments to an ex-spouse taxable?
Deficiency notice required for innocent spouse Tax Court petition.
Innocent spouse provisions and community property.
Innocent spouse relief reversed.
IRS changes procedures for equitable innocent spouse cases.

Terms of use | Privacy policy | Copyright © 2020 Farlex, Inc. | Feedback | For webmasters