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The reconstruction is, to some extent, overstated because some of
the source documents were shown not to reflect gambling
expenditures. In addition, it has not been established that the
amounts reflected were expended solely for gambling. The
expenditures do not reflect the source of the funds expended.
Some of the funds may represent winnings, and some may represent
Philip's and petitioner's cash-flow from other income, tax
savings, or other sources.
Petitioner was aware that Philip was an avid gambler both
when she married him and during their marriage. During the years
in issue, petitioner was not aware of the full extent of Philip's
gambling expenditures. Philip wrote checks and depleted both his
and the couple's checking accounts to the point where checks on
the account used by petitioner for household matters were
returned because of insufficient funds. By 1990, petitioner and
Philip argued, and their relationship deteriorated due to
Philip's gambling and the overdrawn accounts.
Petitioner's and Philip's joint income tax returns for the
taxable years 1981 through 1985 reported income in the amounts of
$297,982, $595,375, $216,932, $660,892, and $1,264,674. The
income tax deficiencies determined by respondent for the taxable
years 1981 through 1985 are as follows:
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