Anthony J. Marzullo and Mary P. Marzullo - Page 15

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          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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