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decline in value of their Price Co. stock. Respondent argues
that any margin calls were due to petitioners' spending habits
and not from a drop in the price of their stock.
We accept that there were margin calls. We are not
persuaded, as petitioner testified, that the margin calls were
due solely to market fluctuations. The margin calls were due, at
least in equal part, to petitioners' undisciplined spending.
Petitioner testified that during this time period he and
Mrs. Vinikoor were experiencing financial difficulties and living
"hand to mouth". An examination of petitioners' account
statements, however, quickly indicates that they were not living
the lifestyle of a recent graduate earning $12,000 per year.
Instead, petitioners were incurring substantial amounts of
personal debt.
As of October 30, 1987, petitioners had accumulated $272,016
of debt against their account. After taking into account the
2,000 shares of Price Co. stock which were sold on October 29,
1987, and used to reduce the amount of their debt, petitioners
spent $93,779 in the 5-month period between May 29, 1987, and
October 30, 1987.
In January 1988, 1 month after a margin call, Mrs. Vinikoor
wrote herself $7,000 worth of checks from the account. In
February 1988, she wrote herself $6,300 worth of checks from the
account. This was not atypical of petitioners' spending habits,
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