- 18 -
section 6013(e)(1).” Allen v. Commissioner, 514 F.2d 908, 913
(5th Cir. 1975), affg. in part and revg. in part on other grounds
and remanding 61 T.C. 125 (1973).
This Court then applied the foregoing principle in Grubich
v. Commissioner, T.C. Memo. 1993-194, to a situation bearing
marked resemblance to that now before us and also involving the
omission of income generated by a business. In Grubich v.
Commissioner, supra, Mr. and Mrs. Grubich operated The Original
Christmas Store, which sold holiday decorations and gift items.
Mr. Grubich handled the financial and administrative side of the
business. Id. Mrs. Grubich handled the artistic and decorative
side, creating merchandise displays and selecting inventory. Id.
We characterized the situation as follows:
Although petitioner may not have understood how
Mr. Grubich handled the financial and tax affairs of
The Original Christmas Store, and even though it was
Mr. Grubich who fraudulently omitted the items of gross
income from the gross receipts reported on the Schedule
C of their returns, there is overwhelming evidence that
the gross income itself (rather than its omission) was
attributable to the joint efforts and activities of Mr.
and Mrs. Grubich. * * *
Petitioner, along with her former husband,
actively and substantially participated in the business
activity that generated the omitted income. Therefore,
the substantial understatements were attributable to
grossly erroneous items of both Mr. Grubich and
petitioner. [Id.]
Furthermore, because there was “nothing in the record that would
enable us to make an allocation of the relative value of
petitioners’ respective services”, we concluded: “Inasmuch as
Page: Previous 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 NextLast modified: May 25, 2011