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canceled checks, surely would have reason to know of the expenses
paid for in Mr. Haggart’s business. See Kenney v. Commissioner,
T.C. Memo. 1995-431.
Mrs. Haggart argues that she did not have reason to know of
the disallowed deductions and unreported income because she “just
dropped off the typical stuff * * * [documentation] I normally do
and just picked it * * * [completed return] up at a later date.”
But, Mrs. Haggart provided the accountant, Mr. Poltonowicz, with
the documents necessary to prepare the returns, including the
Forms W-2 and 1099-MISC and Mr. Haggart’s “list of business
expenses.” Mrs. Haggart must have reviewed the documents before
leaving them with Mr. Poltonowicz. Otherwise, she could not have
known what she gave to him. Consequently, Mrs. Haggart had
reason to know of the overstated business expenses claimed on the
1996 and 1997 Schedules C.
Additionally, Mrs. Haggart testified that she does not
recall reviewing the return before signing it. But, “a spouse
cannot obtain the benefits of section * * * [6015] by simply
turning a blind eye to--by preferring not to know of--facts fully
disclosed on a return, of such a large nature as would reasonably
put such spouse on notice that further inquiry would need to be
made.” Levin v. Commissioner, T.C. Memo. 1987-67; see also Cohen
v. Commissioner, T.C. Memo. 1987-537. Mrs. Haggart cannot escape
joint and several liability for the large unsubstantiated amounts
unambiguously listed on the Schedules C by simply choosing not to
review the return.
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