Guy Nathaniel Gay, Jr., Petitioner and Kimberly S. Gibson, Intervenor - Page 10

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                    The factors weighing against relief are:  (1)                     
               petitioner had knowledge of the omitted income giving rise             
               to the deficiency, an extremely strong factor, and (2)                 
               petitioner will not suffer economic hardship if relief is              
               not granted.                                                           
                    Respondent did not abuse his discretion in determining            
               that relief should not be granted to petitioner.  The                  
               overriding factor which weighs against the granting of                 
               relief is petitioner’s knowledge of the items giving rise to           
               the understatement.                                                    
               An important factor in this case is that the deficiency and            
          penalty are solely attributable to intervenor in that the                   
          unreported income was earned solely by her.  Furthermore,                   
          intervenor most likely derived the primary benefit from this                
          income and from an initial lack of payment of taxes with respect            
          thereto:  Intervenor and petitioner were separated for 9 months             
          during 1998 and, while petitioner had Federal income taxes                  
          withheld from his income, intervenor had nothing withheld from              
          the unreported income.                                                      
               The most important factor in this case is intervenor’s legal           
          obligation under the North Carolina court’s order to either                 
          directly pay the 1998 Federal tax liability or indemnify                    
          petitioner for his payment thereof.  We note that this Court is             
          not being called upon to discern intervenor’s legal obligations             
          under the North Carolina court order because neither respondent             
          nor intervenor disputes the fact that intervenor is legally                 
          obligated to pay the deficiency in this case.  Furthermore,                 








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