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to pay off his personal loans and to invest in a limited
partnership).
Petitioner resembles the innocent spouses in Hillman and
Killian, in that the funds were not used to benefit her in any
way but were funneled into Glenn’s investments in the Hoyt
partnerships.
Because petitioner received little to no benefit from the
erroneously claimed Hoyt partnership-related tax benefits, we
find that this factor weighs heavily in favor of granting
petitioner relief.
The second prominent factor--namely, concealment or
wrongdoing by the nonrequesting spouse, also weighs in
petitioner’s favor. As stated, Glenn repeatedly told petitioner
that they were required to file joint Federal income tax returns,
that the Hoyt partnerships were his investments, and that he
would be responsible for them. This factor, combined with other
factors, demonstrates that it would be inequitable to hold
petitioner liable. We note that petitioner is divorced from
Glenn, that none of the erroneous deductions is attributable to
her, that she did not know and had no reason to know of the
substantial understatements, that she satisfied her duty of
inquiry, and that she has subsequently made a good faith effort
to comply with the tax laws.
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