Pursuant to the regulations, we also look to transfers
of property in years following the years at issue. Sec.
1.6013-5(b). In 1994, the Trina Drive property, which was
purchased in 1985, was sold for $64,000. Originally
purchased jointly by the DiMicheles, title had been
transferred to petitioner exclusively after Mr. DiMichele's
incarceration. Thus, petitioner personally received all of
the proceeds from the sale, which constitutes a benefit to
petitioner.
Petitioner has demonstrated no current source of
income or financial support, so we assume that her living
money is still coming out of her and her husband's
accumulated assets. We therefore infer that she is still
benefitting from the use of money traceable to the tax
understatements resulting from unreported income earned in
the tax years at issue.
Petitioner, furthermore, retained a substantial
portion of the couple's assets when Mr. DiMichele was sent
to prison. All assets which petitioner claimed and that
were not forfeited to the Federal Government were retained
by petitioner.
It is noted that subsequent to Mrs. DiMichele's filing
for divorce in April, 1994, no further action has been
taken and Mr. DiMichele continues to live at petitioner's
residence in Philadelphia. This factor therefore will be
accorded no weight in the 6013(e)(1)(D) determination.
Moreover, in light of the foregoing discussion and of
other evidence, we conclude that petitioner did have
knowledge of the circumstances surrounding the tax
understatements, satisfying section 6013(e)(1)(C). In
thus concluding, we credit the testimony of Mr. Madgin.
Mr. Madgin testified that he had discussed drug
transactions in petitioner's presence on at least one
occasion. He also testified that petitioner had been
involved in a drug transaction when he delivered to her a
bag of cash to give to her husband. We find that
petitioner was intelligent and competent. Petitioner's
knowledge of her husband's drug activities was coupled with
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