Linda K. Haltom - Page 13

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         notice something's up if her husband suddenly starts bringing in             
         so much money that their standard of living suddenly becomes much            
         better than before.                                                          
              In many cases that we have decided in the Commissioner's                
         favor, families were spending three or four or even six times the            
         income they reported during the years in question.4  But that was            
         not the case with the Haltoms.  During the years at issue, their             
         lifestyle did not change that much.  They did pay off a mortgage,            
         make improvements to their home, buy new furniture, and landscape            
         their yard.  Jerry also had a membership in a country club.  Yet             
         while these are large expenses--over $60,000 between 1990 and                
         1992--this spending was in line with their reported income for               
         the years at issue.  When we exclude the car payments, which                 
         Linda believed the Taylor Company was paying,5 the expenses that             
         the Haltoms paid from 1990 through 1992 exceeded their reported              
         income by less than $30,000.6  Given that Jerry paid many of the             

               4 Barranco v. Commissioner, T.C. Memo. 2003-18; Hammond v.             
          Commissioner, T.C. Memo. 1990-22 (two or three times as much),              
          affd. without published opinion 938 F.2d 185 (8th Cir. 1991);               
          Ayer v. Commissioner, T.C. Memo. 1989-614 (three times).                    
               5 See Ferrarese v. Commissioner, T.C. Memo. 1993-404 (Court            
          excluded cost of entertainment when wife believed tickets were              
          provided by husband’s employer), affd. without published opinion            
          43 F.3d 679 (11th Cir. 1994).                                               
               6 From 1990-92, we calculate that Jerry had about $104,000             
          of salary directly deposited into the joint checking account.               
          The IRS calculated that from 1990 to 1992, Jerry spent about                
          $140,000 on family expenses from the five accounts to which Linda           

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