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“The petitioner cannot be relieved from liability under I.R.C. �
6015 because she had reason to know of the understatements on the
1986 joint income tax return; and because she significantly
benefitted from the unreported income, it would not be
inequitable to hold her jointly and severally liable.”
Petitioner argues that she satisfies all four section 6015(b)
requirements.
We need not decide whether petitioner satisfies the third
(section 6015(b)(1)(C)), lack-of-knowledge requirement, since,
taking into account all of the facts and circumstances, as
required by section 6015(b)(1)(D), we find that it would not be
inequitable to hold her liable for the deficiency in tax we here
redetermine. The establishment and funding of the trust plays a
large role in our reaching that conclusion. The trust was
established by agreement dated April 30, 1989, and petitioner is
the sole beneficiary. Stocks and bonds with an approximate fair
market value of $1,150,509 were transferred to the trust. In
1994, husband was convicted of tax evasion for failing to report
his conversion of the DTC liquidating dividend and willfully
making false returns for 1986 by failing to report a liquidating
dividend from Omni of approximately $2.2 million. The sentencing
judge stated: “[T]he court feels confident that you have either
secreted funds or you have placed funds in trust to other family
members so that funds are available.” In the District Court
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