- 20 - Schedules A attached to the returns listed some of the Womacks' expenses. Petitioner knew how her paycheck was spent and that all of her paycheck was spent. Her net pay in 1990 was $14,528 but $24,718 was deposited into her Brevard Federal account. She knew that she received additional money from Mr. Womack to pay household expenses and other expenses for her and the children. Petitioner did not know about the loans from her father and did not establish that she knew of any other sources of funds available to Mr. Womack. Petitioner had a duty to inquire as to how Mr. Womack could pay their usual bills and afford the additional expenses of her surgery and jewelry, when he was reporting no net income from his business. Mr. Womack paid a monthly mortgage payment of $945 for a total of over $10,000 a year. We find that petitioner had reason to know of the understatements. Inequity of Holding Petitioner Liable To qualify for innocent spouse relief, the taxpayer must show that, given all the facts and circumstances, it would be inequitable to hold the taxpayer liable for the tax deficiency attributable to the substantial understatement of the other spouse. Sec. 6013(e)(1)(D). One factor to consider is whether the taxpayer seeking relief significantly benefited from the erroneous items of the other spouse. Estate of Krock v. Commissioner, 93 T.C. 672, 677 (1989). Normal support is not a significant benefit. Id. at 678-679; Flynn v. Commissioner, 93Page: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Next
Last modified: May 25, 2011