-15-
for its employees, it does not follow that she must have known
about the unreported income from the College. The unreported
income received from the College was not that of Mrs. Marzullo.
She did not negotiate the arrangement with the College. On the
basis of her background, and having observed Mrs. Marzullo while
testifying, we do not believe that she knew or had any reason to
know that Mr. Marzullo received income from the College that he did
not report on their joint tax returns.
Since the third of the four requirements of section 6013(e)
has been met, we now must decide whether it would be inequitable to
hold Mrs. Marzullo liable for the deficiency attributable to the
understatement with respect to the unreported income from the
College. Sec. 6013(e)(1)(D). In this regard, the focus is on
whether Mrs. Marzullo (the spouse seeking relief) benefited from
the understatement. See Purcell v. Commissioner, 86 T.C. 228, 242
(1986), affd. 826 F.2d 470 (6th Cir. 1987); Terzian v.
Commissioner, 72 T.C. 1164, 1170-1171 (1979). "Normal support" is
not a significant benefit. Sec. 1.6013-5(b), Income Tax Regs. We
conclude she did not benefit from the understatement.
Petitioners contend that the tax savings benefited their four
sons, who had "very healthy appetites, substantial clothing
expenses, and private school tuition bills", rather than Mrs.
Marzullo, who "did not own expensive jewelry, antiques, or other
extravagant items". We find that petitioners' standard of living
did not significantly increase as a result of the tax
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