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We disagree with petitioner's interpretation of Friedman v.
Commissioner, supra, as well as her characterization of herself
as unsophisticated with respect to financial matters. In
Friedman v. Commissioner, supra, the Court of Appeals applied the
knowledge standard that it adopted in Hayman v. Commissioner,
supra. In Friedman v. Commissioner, supra, however, the taxpayer
was a "housewife and unemployed former secretary with a high
school education possessing only a rudimentary grasp of the
simplest tax principles." Friedman v. Commissioner, 53 F.3d at
530.15 The Court of Appeals held that the taxpayer in Friedman
v. Commissioner, supra at 531, satisfied her duty of inquiry when
she asked her former husband about the deductions that gave rise
to the understatements, and he told her that "they resulted from
a tax shelter and for her not to worry." In so holding, the
Court of Appeals relied on the fact that the taxpayer knew that
the returns in question had been prepared by an accountant, who
was also a trusted personal friend of the family, and that the
tax shelter had been recommended to her former husband by a tax
expert, whose reputation she was familiar with through her past
15
The facts of the instant case are more analogous to those
of Hayman v. Commissioner, 992 F.2d 1256, 1258 (2d Cir. 1993),
affg. T.C. Memo. 1992-228, which involved a "highly-paid,
college-educated vice-president and merchandising director
employed by the well-known women's clothing chain, Ann Taylor".
Friedman v. Commissioner, 53 F.3d 523, 530 (2d Cir. 1995),
(citing Hayman v. Commissioner, supra at 1258), affg. in part and
revg. in part T.C. Memo. 1993-549.
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