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3. Equities
Petitioner must show, based on all the facts and
circumstances, that it would be inequitable to hold her liable
for the deficiency attributable to the substantial
understatement. Sec. 6013(e)(1)(D); sec. 1.6013-5(b), Income Tax
Regs. Relevant factors include: (1) Whether the taxpayer
seeking relief significantly benefited, directly or indirectly;
(2) whether the spouse seeking relief has been deserted,
divorced, or separated from the other spouse, and; (3) the
probable hardships that would befall the spouse seeking relief if
she were not relieved of joint liability.
The record reveals that petitioner did not significantly
benefit from the grossly erroneous deduction attributable to Mr.
Heitzman’s interest in Stonehurst. Mr. Heitzman spent $43,400
purchasing his interest. His total claimed State and Federal
income tax savings were $66,990. Mr. Heitzman netted no more
than $23,590 from the Stonehurst deductions. The record does not
show the disposition of these funds. However, money being
fungible, petitioner must show that she did not even indirectly
benefit.
Normal support does not constitute a “significant benefit”,
Flynn v. Commissioner, supra at 367, and is measured by the
circumstances in each case, id. Petitioner’s and Mr. Heitzman’s
standard of living, while comfortable throughout this period, did
not appreciably change in 1979 or thereafter until they separated
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