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spousal maintenance. Pursuant to the separation agreement,
Gerald transferred full ownership of the marital residence to
petitioner, and petitioner incurred a $400,000 home equity loan
(home equity loan), using the residence as collateral. Gerald
received $40,000 of the proceeds from the home equity loan, and
petitioner used about $250,000 of the proceeds from the home
equity loan to pay the tax liabilities attributable to income tax
deficiencies for the taxable years 1975, 1976, and 1977. Those
deficiencies are not at issue in this case, but they are
discussed below.
In the separation agreement, Gerald agreed to pay petitioner
$5,000 per month to amortize the home equity loan until the loan
was repaid. Gerald reneged on this agreement after making six
monthly payments of $5,000. Gerald also reneged on his
obligation to pay a portion of the children's college expenses,
insurance, and other expenses. Petitioner's divorce attorney
advised her not to file suit against Gerald in an attempt to
enforce the separation agreement, because the divorce attorney
felt that Gerald had no resources or income and was judgment
proof.
In 1988, petitioner sold a portion of the land on which her
home was located. After the sale, petitioner discovered that
taxes for the taxable year 1984 remained unpaid, so she used
approximately $200,000 of the proceeds to satisfy the tax
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