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petitioner’s taxable year 1996. The issue for decision is
whether respondent abused his discretion in denying petitioner
such relief. We hold that he did not.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
Petitioner resided in Aventura, Florida, when she filed the
petition. At all material times, petitioner was, and remains,
married to Dr. John Merendino (Dr. Merendino).
Dr. Merendino’s Sale of Business
In the early 1990s, Dr. Merendino established a business
directed toward providing rehabilitation to elderly disabled
people in nursing homes. In 1995, while Dr. Merendino was in
negotiations to sell his business, the U.S. Department of Justice
(“Justice Department”) was investigating Medicare payments made
to Dr. Merendino. The Justice Department learned of the pending
sale and mandated that the sales proceeds be placed in escrow
pending the final resolution of the matter. On June 12, 1997,
the Justice Department endorsed a settlement agreement
authorizing disbursement of the funds, all of which were applied
to taxes or to settle the civil Medicare case. Ultimately, Dr.
Merendino did not receive any significant portion of the sale
proceeds in cash because the proceeds were held in escrow.
Petitioner’s Relationship With Dr. Merendino
Petitioner and Dr. Merendino (the Merendinos) have been
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