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We conclude that petitioner had no actual knowledge of and
had no reason to know of either the omitted embezzlement income
or of the erroneous nature of the $585,000 claimed Keogh
deduction.
With regard to the last element of the innocent spouse
provision (namely, whether it would be inequitable to hold
petitioner liable for the income tax deficiencies and additions
to tax relating to the embezzlement income and to the $585,000
erroneously claimed Keogh deduction), a key factor in the
analysis is whether the person seeking relief significantly
benefited, directly or indirectly, from the tax savings that
resulted from the omitted income and from the erroneous
deduction.
In determining whether a taxpayer significantly benefited
from omitted income and from erroneous deductions, normal support
received from a spouse will not be regarded as a significant
benefit. Sec. 1.6013-5(b), Income Tax Regs. Further, in
considering whether a benefit is to be regarded as normal
support, the lifestyle to which the taxpayer is accustomed is
taken into account. Belk v. Commissioner, 93 T.C. 434, 440
(1989).
Petitioner has met her burden of proving that she received
no significant benefit, directly or indirectly, either from
Martin's embezzlement activity or from the $585,000 erroneously
claimed Keogh deduction. During the years in issue, petitioner
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