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Under former section 6013(e), whether the taxpayer
significantly benefited from the omitted income was an important
factor in reaching our conclusion. See Estate of Krock v.
Commissioner, 93 T.C. 672, 677 (1989). Normal support was not
considered to be a significant benefit. See sec. 1.6013-5(b),
Income Tax Regs. In applying former section 6013(e)(1)(D), we
described normal support as a “floating standard, inasmuch as
‘one person’s luxury can be another’s necessity’”. Klimenko v.
Commissioner, T.C. Memo. 1993-340 (quoting Sanders v. United
States, 509 F.2d 162, 168 (5th Cir. 1975)). We examined evidence
of the taxpayer’s lifestyle, including his expenditures, and how
the omitted income was used by the taxpayer and his spouse to
decide whether a taxpayer significantly benefited from the
understatement. See Estate of Krock v. Commissioner, supra.
In this case, our evaluation of the evidence regarding
petitioner’s lifestyle, expenditures, and other financial matters
leads us to the conclusion that petitioner did not substantially
benefit from the understatement. The family home was purchased
with funds supplied by petitioner. Petitioner made a downpayment
of approximately $13,000 toward the purchase price of the house
(approximately $175,000) and supplied the funds to pay the
mortgage during petitioners’ marriage. When the family home was
sold, petitioner retained none of the proceeds.
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