(a) (1) Notwithstanding subdivision (a) and the first sentence of subdivision (b) of Section 19006: (A) An individual who has made a joint return may elect to seek relief under the procedures prescribed under subdivision (b), and (B) If the individual is eligible to elect the application of subdivision (c), the individual may, in addition to any election under subparagraph (A), elect to limit the individualâs liability for any deficiency with respect to the joint return in the manner prescribed under subdivision (c). (2) Any determination under this section shall be made without regard to community property laws. (b) (1) Under procedures prescribed by the Franchise Tax Board, ifâ (A) A joint return has been made under this chapter for a taxable year, (B) On that return there is an understatement of tax attributable to erroneous items of one individual filing the joint return, (C) The other individual filing the joint return establishes that in signing the return he or she did not know of, and had no reason to know of, that understatement, (D) Taking into account all facts and circumstances, it is inequitable to hold the other individual liable for the deficiency in tax for that taxable year attributable to that understatement, and (E) The other individual elects (in the form and manner as the Franchise Tax Board may prescribe) the benefits of this subdivision not later than the date that is two years after the date the Franchise Tax Board has begun collection activities with respect to the individual making the election, then the other individual shall be relieved of liability for tax (including interest, penalties, and other amounts) for that taxable year to the extent that the liability is attributable to that understatement. (2) If an individual who, but for subparagraph (C) of paragraph (1), would be relieved of liability under paragraph (1), establishes that in signing the return the individual did not know, and had no reason to know, the extent of the understatement, then the individual shall be relieved of liability for tax (including interest, penalties, and other amounts) for that taxable year to the extent that the liability is attributable to the portion of the understatement of which that individual did not know and had no reason to know. (3) For purposes of this subdivision, the term âunderstatementâ has the meaning given to that term by Section 6662(d)(2)(A) of the Internal Revenue Code. (c) (1) Except as provided in this subdivision, if an individual who has made a joint return for any taxable year elects the application of this subdivision, the individualâs liability for any deficiency that is assessed with respect to the return may not exceed the portion of the deficiency properly allocable to the individual under subdivision (d). (2) Except as provided in clause (ii) of subparagraph (A) of paragraph (3) or subparagraph (C) of paragraph (3), each individual who elects the application of this subdivision shall have the burden of proof with respect to establishing the portion of any deficiency allocable to that individual. (3) (A) (i) An individual shall only be eligible to elect the application of this subdivision ifâ (I) At the time the election is filed, that individual is no longer married to, or is legally separated from, the individual with whom that individual filed the joint return to which the election relates, or (II) That individual was not a member of the same household as the individual with whom the joint return was filed at any time during the 12-month period ending on the date the election is filed. (ii) If the Franchise Tax Board demonstrates that assets were transferred between individuals filing a joint return as part of a fraudulent scheme by those individuals, an election under this subdivision by either individual shall be invalid (and subdivision (a) and the first sentence of subdivision (b) of Section 19006 shall apply to the joint return). (B) An election under this subdivisi
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