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We have previously concluded that the Barrancos’ lifestyle
during the years at issue was in all probability financed in
significant part by income omitted from the joint returns. Money
being fungible, it follows, in the absence of contrary evidence,
that their lifestyle was also financed, directly or indirectly,
by the understatements.
For each year at issue, petitioner enjoyed the lifestyle
afforded, directly or indirectly, by the tax savings, and
petitioner thereby benefited from the tax savings. More
particularly, in 1986 Dr. Barranco gave petitioner his interest
in: (1) Their personal residence, which they constructed in
1983; (2) more than 29 acres underlying or adjacent to their
personal residence; and (3) their lakeside vacation home.14 In
13(...continued)
In doing these mathematics, we give petitioner the benefit
of the doubt by assuming, without deciding, that the accounted-
for omitted income (i.e., the $587,881 paid to the accountant and
the $400,000 or $450,000 allegedly seized from Dr. Barranco’s
investment accounts) should be counted entirely against the
understatements.
In determining the $1,693,725 amount of understatements, we
have assumed (consistent with petitioner’s position in this
proceeding), but have not decided, that she did not sign the 1988
amended return.
14 Both petitioner and Dr. Barranco testified that Dr.
Barranco made these transfers to protect his property interests
from potential malpractice claimants. Respondent argues that
under Virginia law, because petitioner and Dr. Barranco formerly
held the real estate as tenants by the entirety, these properties
would have been exempt from the claims of creditors who did not
have joint judgments against petitioner and Dr. Barranco. See
Rogers v. Rogers, 512 S.E.2d 821, 822 (Va. 1999) (citing
Vasilion v. Vasilion, 66 S.E.2d 599 (Va. 1951)). We need not
(continued...)
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