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and this resulted in the 1980 tax refund that Nancy received
in 1988 being greater than it would otherwise have been.
Petitioners maintain that section 1.6013-5(b), Income Tax
Regs., "disqualify a spouse for relief under Section 6013(e) only
where the alleged benefit is derived from the omitted income and
traceable to the omitted income (or deduction in this case)."
They also maintain that (1) the New Jersey home was bought in
1976 from the funds not traceable to any refund of 1981 tax; (2)
Nancy received only normal support, at a level attained before
the 1981 tax refund; (3) the life insurance proceeds are not
traceable to the 1981 tax refund; (4) the mortgage payments are
properly treated as part of normal support at a level established
before the 1981 tax refund; and (5) the tax refund that Nancy
received in 1988 resulted from an abatement of 1980 tax liability
that "had absolutely no relationship to the 1981 tax year."
We agree with respondent's conclusion and contention as to
the tax refund Nancy received in 1988.
Under section 6013(e)(1)(D), Nancy is not entitled to
innocent spouse treatment unless she can show that "taking into
account all the facts and circumstances, it is inequitable to
hold [her] * * * liable for the deficiency in tax * * *
attributable to such substantial understatement". This provision
of the statute specifically directs us to take into account
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