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instant case, Nancy had practically no income for 1981, and so
innocent spouse treatment would not relieve her from a liability
she would have had even if she had filed a separate tax return.
Thus, this consideration should not disqualify Nancy from
innocent spouse status.
If our analysis were to end at this point, then we would
conclude that it is inequitable to hold Nancy liable for the 1981
deficiency in tax.
However, Nancy directly received a $54,372.61 benefit from
the tax savings produced by the State Coal royalty deduction.
The tax refund check for 1980, received by Nancy in 1988 in the
amount of $128,715.36, included $54,372.61 of Sheldon's withheld
income tax for 1981 (plus the interest thereon), which amount
would not have been available for transfer to the 1980 tax year
if the State Coal royalty deduction had not created the $185,361
tax saving for 1981. We consider this to be a significant
benefit. Thus, Nancy received a significant benefit on account
of the grossly erroneous item.
In light of the foregoing, we conclude, and we have found,
that it is not inequitable to hold Nancy liable for the
deficiency.
Petitioners contend that the 1988 refund of 1980 taxes
resulted from an abatement of 1980 tax liability and was not
related to 1981. However, whatever may have been the source of
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