Cheryl McKnight - Page 21

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          granted.  Petitioner earns approximately $52,000 a year, and                
          rents a comfortable home.  Petitioner and John’s $17,516                    
          underpayment has already been paid in full, and thus no further             
          payments will be required from petitioner if relief is not                  
               We note, however, that petitioner did pay significant other            
          debts attributable to John and to his business.  Petitioner also            
          has had to rebuild her credit due to John’s conduct.  For 6 years           
          petitioner worked for John without being paid.  John squandered             
          most of the marital assets, including the equity in the Castle              
          Rock home, leaving little for petitioner after the divorce.                 
               These additional factors mitigate the weight to be given the           
          economic hardship factor.                                                   

          (2) Knowledge or Reason To Know                                             
               It appears that petitioner should have been on notice that             
          the $17,516 underpayment might not be paid.  Enclosed with the              
          tax return was a letter from petitioner and John stating that               
          full payment could not be made with the return.  In previous                
          years, petitioner and John had had difficulty paying their                  
          Federal income taxes.  These facts combined with John’s                     
          continuing business and financial difficulties should have put              
          petitioner on notice that the $17,516 underpayment reflected on             
          the 1995 joint Federal income tax return might not be paid in               

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