- 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