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Thanks for your learned response. My friend's concern (she is the wife) is what would be the best route for her.

In her words "she has been a kept woman" where were husband dealt with all the financial issues. As I said this has been amicable and he was been the bread winner of the unit but she wants to avoid any tax consequences.

I do no not know his willingness in this matter but it may become a point of contention if she is liable.
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