- 3 -
test; i.e., whether, under the circumstances, it would be
inequitable to hold her jointly liable for the deficiencies.
The U.S. Court of Appeals for the Second Circuit reversed
our holding that petitioner failed the third, or knowledge, test
as to the tax shelter item only, and remanded the matter to this
Court to find additional facts, if necessary, and to decide
whether petitioner has shown that, under the circumstances, it
would be inequitable to hold her jointly liable for the
deficiencies.
FINDINGS OF FACT4
Petitioner met Philip Friedman in 1976 when she was hired as
his secretary. They were married in 1979, the year that Philip
obtained a divorce from his prior wife. In the course of that
divorce, Philip gave almost everything he owned to his first
wife. Petitioner was a young widow with two small children and
depleted savings at the time of her first husband's death.
Petitioner had only a few assets when she married Philip,
including a cooperative residence and an automobile.
When petitioners were first married, they lived in a rented
apartment in New York, New York, with petitioner's two daughters,
4 By this reference, the facts found in Friedman v.
Commissioner, T.C. Memo. 1993-549, are incorporated to the extent
that they are in accord with the opinion of the U.S. Court of
Appeals for the Second Circuit, which affirmed in part and
reversed in part our decision. We repeat some of these findings
here, as relevant to the issue now before us. The parties have
agreed that we may proceed to find facts and decide this matter
on remand based on the existing record and the briefs that have
been filed in this Court by the parties.
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