- 60 -
The record establishes that Mr. Gherman funneled embezzled
funds through the FIP account. The record also shows that during
the 1970's he used FIP funds to subsidize Ms. Walters' show
business endeavors, but it appears, and we so find, that Ms.
Walters did not undertake any show business activities during
1984 through 1986, and none of FIP's money, including embezzled
funds, went to support those activities.
It is possible, and for purposes of deciding the issue we
assume, that Ms. Walters benefited from the unreported income to
some extent above normal support. Nonetheless, under the
circumstances, we find that the fact that she did so benefit is
not determinative because other factors outweigh any benefit she
may have received.
Whether a spouse substantially benefited from the unreported
income is only one factor to consider in determining whether it
is inequitable to hold the spouse liable for the deficiencies and
additions to tax. An additional factor to consider is whether
the spouse claiming relief was deserted, divorced, or separated.
Kistner v. Commissioner, T.C. Memo. 1995-66; sec. 1.6013-5(b),
Income Tax Regs. We also may consider whether the spouse seeking
relief will suffer undue hardship as a result of being held
liable for the deficiencies if relief is denied. See Sanders v.
United States, supra at 171; Dakil v. United States, 496 F.2d
431, 433 (10th Cir. 1974).
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