Harvey I. Epstein and Arlene B. Epstein - Page 14

                                       - 14 -                                         

          that it would be inequitable to hold her liable for the                     
          substantial understatement-related deficiency.  Sec.                        
          6013(e)(1)(D).  One of the factors to be considered is whether              
          the "innocent" spouse received significant benefits as a result             
          of the understatements.  Friedman v. Commissioner, 53 F.3d at               
          532; sec. 1.6013-5(b), Income Tax Regs.  Normal support, measured           
          by the circumstances of the parties, is not considered a                    
          significant benefit for purposes of this determination.  Id.,               
          Flynn v. Commissioner, 93 T.C. 355, 367 (1989).  There is no                
          evidence that petitioner received any unusual benefit from the              
          tax shelter deduction.  Harvey controlled the family finances,              
          and did not allow petitioner to have access to the couple's money           
          beyond that which he, Harvey, chose to give her.  Even if part of           
          the understatements did inure to petitioner's benefit, such                 
          benefit did not exceed normal support.                                      
               At the trial respondent attempted to attach significance to            
          the fact that in 1986 petitioners sold their Hewlett Bay Park               
          house for $725,000, which they had purchased in 1973 for                    
          approximately $118,000.  Since the record contains no indication            
          that the house was in any way enhanced by the money generated by            
          tax savings in the relevant years, we cannot attribute a tax                
          generated benefit to Arlene in connection with the increased                
          value of the house.  Increases in values merely through                     
          inflation, which in this case would also include not only the               





Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  Next

Last modified: May 25, 2011