Philip H. and Anna Friedman - Page 11

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                  * * *.  The magnitude of Friedman's gambling losses,                                     
                  which allegedly exceed the total tax deficiencies owed,                                  
                  would be a factor weighing heavily in favor of a                                         
                  finding that taxpayer did not personally benefit from                                    
                  the tax shelter.  See Pietromonaco, 3 F.3d at 1348.                                      
                  [Friedman v. Commissioner, 53 F.3d at 531.]                                              
                  The statute requires that petitioner show that "taking into                              
            account all the facts and circumstances, it is inequitable to                                  
            hold  * * * [her] liable".  Sec. 6013(e)(1)(D).  Petitioner bears                              
            the burden of proof as to whether it would be inequitable to hold                              
            her liable for the tax shelter portion of the deficiency.  Rule                                
            142(a); Russo v. Commissioner, 98 T.C. 28, 31-32 (1992).  In                                   
            deciding whether it was inequitable to hold a spouse liable,                                   
            courts have considered whether the purported innocent spouse                                   
            benefited5 beyond normal support, either directly or indirectly,                               
            from the understatement of tax liability.  Hayman v.                                           
            Commissioner, 992 F.2d 1256, 1262 (2d Cir. 1993), affg. T.C.                                   
            Memo. 1992-228; Belk v. Commissioner, 93 T.C. 434, 440 (1989);                                 
            Purcell v. Commissioner, 86 T.C. 228, 242 (1986), affd. 826 F.2d                               
            470 (6th Cir. 1987); H. Rept. 98-432 (Part 2), at 1501-1502                                    
            (1984); sec. 1.6013-5(b), Income Tax Regs.  Deduction items, to                                
            the extent that they reduce taxpayers' tax burden, have the                                    
            potential to benefit the purported innocent spouse.  Bokum v.                                  
            Commissioner, 94 T.C. 126, 157 (1990), affd. 992 F.2d 1132 (11th                               
            Cir. 1993).  Normal support is determined in the context of the                                


                  5 The statute once required a significant benefit, but the                               
            wording of the statute for the years under consideration does not                              
            specify a significant benefit.  See Purificato v. Commissioner, 9                              
            F.3d 290 (3d Cir. 1993), affg. T.C. Memo. 1992-580.                                            



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