- 39 -
Another of the facts and circumstances to be taken into
account is whether Nancy significantly benefited from the
substantial understatement of tax.10 Hayman v. Commissioner, 992
F.2d at 1262; Purcell v. Commissioner, 86 T.C. at 241. In the
instant deduction case we look at whether Nancy significantly
benefited from the tax savings produced by the erroneous
deduction. Bokum v. Commissioner, 94 T.C. at 157. Normal
support is not a significant benefit. Whether a benefit is
significant is to be measured by the circumstances of the
parties. Hayman v. Commissioner, 992 F.2d at 1262; Purcell v.
Commissioner, 86 T.C. at 242; sec. 1.6013-5(b), Income Tax Regs.
Nancy and Sheldon saved $185,361 in 1981 Federal income tax
on account of the erroneous State Coal royalty deduction.
Because of withholding prepayments, $74,360.39 plus interest was
returned to Nancy and Sheldon in September 1982 as a refund, and
$54,372.61 was applied as a credit against Nancy's and Sheldon's
1980 tax liability, as of April 15, 1982. The remaining $56,628
10 As we pointed out, supra, in the last paragraph of note 4,
sec. 6013(e) was revised retroactively by sec. 424(a) of DEFRA.
The 1984 amendments removed from the statute the language about
significant benefit. It is clear, however, from the legislative
history that the rewording was not intended to remove from
consideration whether the relief-seeking spouse benefited from
the understatement of tax. H. Rept. 98-432 (Part 2), 1501, 1502
(1984). The conference committee agreement follows the House
bill with two modifications, which are not applicable to this
issue. H. Conf. Rept. 98-861, at 1119-1120 (1984), 1984-3 C.B.
(Vol. 2) 1, 373-374.
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