Debra Anne Banderas - Page 14

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               relief to the extent that the income tax liability is                  
               attributable to that portion.  [Id. sec. 4.02(1)(b),                   
               2003-C.B. at 298.]                                                     
               Petitioner argues that respondent erred in concluding that             
          she possessed knowledge or reason to know that the taxes would              
          not be paid.  As to 1997, petitioner contends that she had a                
          reasonable belief that the taxes would be paid either out of the            
          bankruptcy proceeding, from Dr. Banderas’s pension plan, or from            
          future earnings obtained through Dr. Banderas’s returning to                
          work.  As to 1999, petitioner alleges that she reasonably                   
          believed that the taxes would be paid from funds remaining after            
          the close of the bankruptcy proceeding, particularly in light of            
          the additional $750,000 received by the bankruptcy estate from a            
          life insurance policy on Dr. Banderas.                                      
               Petitioner testified regarding payment of the balances due             
          on the 1997 and 1999 returns, of which she was concededly aware.            
          The following colloquy on direct examination dealt with 1997:               
                    Q    Did your husband attempt to pay the 1997                     
                    A    We didn’t--we had no access to the money at                  
               that time.  It was in the Bankruptcy Court, and we--                   
                    Q    So the bankruptcy was filed in 1997?                         
                    A    Right.  Before we filed the return.                          
                    Q    And the return was filed in 1998?                            
                    A    Right.                                                       
                    Q    And all the funds were tied up in bankruptcy?                

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