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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
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