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education; become members of three country or racquet clubs; and
taken a $3,300 vacation.
During the latter part of 1988 and through 1990, this lavish
lifestyle became even more apparent. Mrs. Zaban was directly
involved in the process of negotiating a $101,000 residential lot
loan, as well as a $528,700 construction loan for the building of
their Lutherville, Maryland, home. Following completion of the new
home in which the monthly mortgage payment increased from
approximately $500 per month to nearly $5,000 per month, which was
paid by Mrs. Zaban, she participated in the furnishing of that
home, which included about $60,000 in purchases. Mrs. Zaban was
also involved in the purchase of over $7,000 in jewelry during 1989
and accumulated a wardrobe filled with fur coats and other clothes
throughout the period in issue.
Given all of the facts and circumstances, we are convinced,
and thus hold, that Mrs. Zaban knew or should have known of the
substantial understatement on petitioners' returns for 1986 through
1990 and thus is not entitled to innocent spouse relief.
b. Inequity in Holding Mrs. Zaban Liable
It would also not be inequitable to hold Mrs. Zaban liable for
the deficiencies for the years in issue. The record demonstrates
that Mrs. Zaban significantly benefited from the underreported
income and from the impermissible deductions (e.g., the large home
and furnishings, cars, fur coats and other clothings, club
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