Linda K. Haltom - Page 16

                                       - 16 -                                         

                   THE COURT:     Has that always been the case?                      
                   THE WITNESS:  No.  Since this incident, she pays                   
              90 percent of the bills, and she looks at my checking                   
              account now, too.                                                       
         We find this testimony eminently credible.  Once Linda’s                     
         suspicions were triggered, instead of “burying her head in the               
         sand” as the Commissioner has argued, she took steps to stay on              
         top of everything happening in the family finances.  But we find             
         that her duty of inquiry was never triggered before the raid, and            
         so conclude that Linda neither knew nor had reason to know of the            
         income omitted from their tax returns.                                       
         B. Equitable Considerations--Section 6015(b)(1)(D)                           
              Section 6015(b)(1)(D) requires that Linda prove that being              
         held liable would be inequitable.  The old regulation addressed              
         inequity in only a general and open-ended way:                               
                   Whether it is inequitable to hold a person                         
                   liable for the deficiency in tax * * * is to                       
                   be determined on the basis of all the facts                        
                   and circumstances. In making such a                                
                   determination a factor to be considered is                         
                   whether the person seeking relief                                  
                   significantly benefited, directly or                               
                   indirectly, from the items omitted from gross                      
                   income. However, normal support is not a                           
                   significant "benefit" for purposes of this                         
                   determination. * * * Other factors which may                       
                   also be taken into account, if the situation                       
                   warrants, include the fact that the person                         
                   seeking relief has been deserted by his                            
                   spouse or the fact that he has been divorced                       
                   or separated from such spouse.                                     

         Sec. 1.6013-5(b), Income Tax Regs., superseded by sec. 1.6015-2,             

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