- 52 -
that were claimed in the joint tax returns, including the 1982
joint tax return, that petitioner and Mr. Korchak filed.
With respect to the lavish or unusual expenditures factor,
respondent concedes in the face of the instant record “that the
record does not reflect that the * * * taxes saved due to the
Madison loss deduction and investment tax credit led to signifi-
cant changes in petitioner’s and Mr. Korchak’s lifestyle or
spending patterns.”25
25We have found: (1) During 1981 and 1982, Mr. Korchak
received Halcon distributions totaling $1,539,269 and $466,309,
respectively; (2) petitioner and Mr. Korchak made a considered
judgment not to change their family’s lifestyle in any way as a
result of Mr. Korchak’s having received such distributions; and
(3) they made that judgment because they did not want to spoil
their children by having a lavish lifestyle. Nothing in the
record suggests that the desire of petitioner and Mr. Korchak not
to spoil their children by having a lavish lifestyle was limited
to the Halcon distributions that Mr. Korchak received in 1981 and
1982. Moreover, in petitioner’s Form 12510 and petitioner’s
attachment to petitioner’s Form 12507, petitioner indicated, and
respondent does not dispute here, that Mr. Korchak, without
consulting her, invested the $92,970 refund claimed in the 1982
joint tax return in Riverside, which filed for bankruptcy in
1989, and that, as a result of that bankruptcy proceeding, Mr.
Korchak lost his entire $700,000 investment in that company. In
addition, in Mr. Korchak’s Form 12508, Mr. Korchak indicated, and
respondent does not dispute here, that Mr. Korchak invested the
$92,970 refund claimed in the 1982 joint tax return in a business
venture of his (namely, Riverside), which later failed. With
respect to the refund of $92,970 claimed in the 1982 joint tax
return, petitioner testified that she had no specific recollec-
tion regarding that return, that she and Mr. Korchak usually
received tax refunds, and that she had no specific recollection
of the refund of $92,970 claimed in the 1982 joint tax return,
although there may have been such a claimed refund. We are
unable to find on the record before us that at the time she
signed the 1982 joint tax return petitioner was aware of the
$92,970 refund claimed in that return. Even if petitioner were
aware at that time of that claimed refund, that would not change
(continued...)
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