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number of years, but of the amount she received she gave Harvey
$34,000 "to pay IRS taxes". She also used most of the money to
pay her father's nursing home expenses, and kept $30,000 which
she used to rehab the Atlantic Beach house.
The art work which Arlene bought with her own earnings had a
total cost over the years of less than $10,000. When Arlene
applied for a home improvement loan on the Atlantic Beach house
on August 5, 1987, the balance sheet supporting her application
for a variable rate $70,000 loan reflected a $100,000 value for
her art collection. The balance sheet also reflected a $150,000
value for personal property. Petitioners' household furnishings,
including furniture, silverware, and china, were all items which
Arlene received from her parents and grandparents (who were
antique dealers), or which petitioners received as wedding
presents.
OPINION
Section 6013(e)(1) provides:
(e) Spouse Relieved of Liability in Certain Cases.--
(1) In general. Under regulations prescribed by
the Secretary, if--
(A) a joint return has been made under
this section for a taxable year,
(B) on such return there is a
substantial understatement of tax
attributable to grossly erroneous items of
one spouse,
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