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5. Economic Hardship
Respondent contends that petitioner had enough assets and
income from which to pay the unpaid tax for 1995 and that
petitioner failed to show that she would suffer economic hardship
if relief is denied. Petitioner contends that she would suffer
economic hardship if relief were denied because she would be
unable to pay for basic living expenses for herself and Mr. Wiwi.
Petitioner paid all of her and at least half of Mr. Wiwi’s
monthly living expenses, totaling about $2,800, in 1997 and 1998.
During that time, petitioner had only temporary and part-time
jobs, and had no benefits. Mr. Wiwi’s medical condition
worsened, and his ability to earn any income decreased.
Petitioner remained married to Mr. Wiwi and paid his increasing
expenses. Petitioner was prudent in saving some money under
these circumstances. On the facts of this case, we disagree with
respondent that petitioner would not suffer a hardship if she
were required to use her savings, or to borrow against the equity
in her house, to pay the unpaid tax attributable to Mr. Wiwi. We
conclude that this factor favors petitioner.
6. Knowledge or Reason To Know
In determining whether a taxpayer in an underpayment case is
entitled to equitable relief under section 6015(f), we consider
whether the requesting spouse knew, or reason to know, that the
tax would be unpaid when the return was signed. Hopkins v.
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