income should have been included in gross income.
Thus, for example, if a person seeking relief
receives from his spouse an inheritance of
property or life insurance proceeds which are
traceable to items omitted from gross income by
his spouse, that person will be considered to
have benefitted from those items. Sec. 1.6013-
5(b) Income Tax Regs.
The comparative "level" of lifestyle that a taxpayer
leads before and after enjoying the benefits of the tax
understatement is not controlling. Stated another way,
present consumption is not required. Acquisition of
property and contributions to investments and savings may
all be construed as significant benefits which the spouse
enjoys. Purificato v. Commissioner, 9 F.3d 290 (3d. Cir.
1993); see also Estate of Krock v. Commissioner, 93 T.C.
672 (1989).
Petitioner did not live a lavish lifestyle during the
years at issue. However, we find that petitioner
benefitted significantly from the understatements or the
items underlying them. The evidence shows that petitioner
acquired real property, contributed substantial funds to
bank accounts, and amassed a large jewelry collection.
Petitioner did not rebut this evidence by demonstrating a
source of funds separate from those arising from the tax
understatement. The burden of showing the source of funds
for property received is on the taxpayer. Tertian v.
Commissioner, 72 T.C. 1164 (1979). Petitioner has not
shown us an alternative source of funds for the benefits
she received.
The purchase of real property is a benefit. Schlosser
v. Commissioner, T.C. Memo. 1992-233, affd. 2 F.2d 404
(11th Cir. 1993). During 1985 and 1986, petitioner
acquired, along with her husband, two real property
interests for $32,000 and $8,500, respectively. Payments
were ostensibly also being made on the 1433 W. Passyunk
Avenue property purchased by the DiMicheles for $120,000 in
1983.
Page: Previous 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 NextLast modified: May 25, 2011