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The couple did receive a divorce subsequent to 1991. We find,
however, that such circumstance does not outweigh the significant
benefits petitioner received from the embezzled funds.
Furthermore, petitioner has not established that any hardship she
would encounter as a result of incurring liability for the
deficiencies attributable to the omission of the embezzled funds
from the 1990 or 1991 returns would make it inequitable to hold
her jointly liable for those deficiencies.
We find, therefore, that it would not be inequitable to hold
petitioner liable for the understatements attributable to the
funds embezzled by Mr. Peterson in taxable years 1990 and 1991.
Because petitioner has failed to satisfy all of the
conjunctive factors set forth in section 6013(e)(1), we hold that
she does not qualify for "innocent spouse" relief and is
therefore jointly and severally liable for the deficiencies in
tax, additions to tax, and penalties for 1990 and 1991.
To reflect the foregoing,
Decision will be
entered under Rule 155.
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