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the relief-seeking spouse (1) had knowledge or reason to know of
the items giving rise to the deficiency, (2) has significantly
benefited (beyond normal support) from those items, and (3) will
not experience economic hardship if relief from the liability is
not granted. Barbara was aware of the Vulcan investment, of the
resulting reported losses, and of the risk of an IRS challenge to
the tax reductions claimed to result from those reported losses.
Clearly, then, she had reason to know of the items giving rise to
the deficiencies. She benefited from the items in that the
losses, among other things, reduced the Jonsons’ taxes and
contributed to their ability to pay for their children’s college
educations, which Barbara admitted was important to her. Because
Barbara is deceased, there can be no economic hardship to her
personally if equitable relief is denied. We cannot conclude
that respondent acted arbitrarily, capriciously, or without sound
basis in fact in denying Barbara equitable relief.
3. Conclusion
Under the facts and circumstances of this case, we hold that
respondent did not abuse his discretion in denying equitable
relief to Barbara under section 6015(f).
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