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most of it on small-money items that benefited only her. She
also gave some of the money to her children and her ex-husband.
Of the $7,200 she put into their joint savings account in 1999,
David withdrew about $1,670. But in their life--a life where
they chose to spend nearly all their legitimate 1999 income of
$100,000--this extra income was not “significant”.
We also ask whether David significantly benefited from not
paying the tax. See Rev. Proc. 2000-15, sec. 4.03(2)(c), 2000-1
C.B. at 448; Mellen v. Commissioner, T.C. Memo. 2002-280. Here,
we think it is important that the Billingses filed for bankruptcy
under chapter 7 in May 2002. Chapter 7 required them to
liquidate all of their nonexempt assets, and turn that money over
to a trustee. Rosalee’s tax debt was not dischargeable, however,
and so she will continue to owe the IRS until that debt (which
the parties stipulated was close to $30,000 by the end of 2006)
is paid in full. We therefore do not consider David to have this
unpaid tax money available for his personal use, and we find that
the Commissioner clearly erred when he found that David
significantly benefited from the partial nonpayment of the
Billingses’ 1999 taxes.
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