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Hardy has income for 1985 in an amount greater than that deter-
mined in the notice (viz., $29,684) on which the deficiency
determined therein and claimed herein is based. Hereinafter,
unless otherwise indicated, any reference to the income paid to
and/or earned by Mr. Hardy during 1983, 1984, and 1985 shall be
to such income of $48,264.38, $22,986, and $29,684, respectively.
Alleged Oral Agreement Between
Petitioner and Mr. Hardy
Although petitioner does not dispute that any income that
was paid to and/or earned by Mr. Hardy during the years at issue
is presumed to be community income under Nevada's community
property law, she contends that (1) at the time of her marriage
to Mr. Hardy, she and Mr. Hardy entered into an oral agreement to
keep their respective property separate, and (2) accordingly, the
income that was paid to and/or earned by Mr. Hardy during those
years is not community income. Respondent disputes the existence
of such an oral agreement. Respondent further maintains that,
even assuming arguendo that petitioner and Mr. Hardy had entered
into such an agreement, income paid to and/or earned by Mr. Hardy
during the years at issue would nonetheless constitute community
income for Federal income tax purposes because, under Nevada law,
an agreement between spouses to keep their respective property
separate is not effective against a third party, such as respon-
dent, unless it is in writing and is recorded.
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