Raymond F. Kling and Barbara K. Kling - Page 57




                                       - 57 -                                         
          account and the Ameritrust account were frequently dishonored due           
          to insufficient funds.  This would have caused a reasonable                 
          person to believe that Raymond's activities were losing money.              
          It is unlikely that an examination of the statements would have             
          alerted Barbara that any income was omitted.                                
               Although we recognize that there may have been a disparity             
          between the family's total expenditures and their reported income           
          for the years 1991 and 1992, this does not necessarily indicate             
          that Barbara should have known of the omitted income.  The record           
          clearly shows that the omitted funds were used primarily to                 
          purchase Raymond's memorabilia.  The relatively small amount used           
          to help support the family was spent primarily for groceries,               
          house payments, bills, and other minor living expenses.                     
          Moreover, petitioners borrowed against their credit cards to pay            
          the expenses.  These expenditures were in the nature of ordinary            
          support and would not normally give a spouse reason to know of              
          omitted income.  See Mysse v. Commissioner, 57 T.C. 680, 698-699            
          (1972).  There is no evidence of any lavish or extraordinary                
          expenditures which would have put Barbara on notice of unreported           
          income.  Cf. Estate of Jackson v. Commissioner, 72 T.C. 356, 361            
          (1979); Mysse v. Commissioner, supra.                                       
               We conclude, from our examination of the evidence presented,           
          that there was no reason for Barbara to have known that there was           
          income from Raymond's sports memorabilia activity that was not              







Page:  Previous  41  42  43  44  45  46  47  48  49  50  51  52  53  54  55  56  57  58  59  60  Next

Last modified: May 25, 2011