Lota Womack - Page 20

                                       - 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, 93             




Page:  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