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First, since West Pine did not have an office, Mrs. Gaskins
would have signed these checks at her house or that of the
Quinns, not at the mining site where she might have witnessed
any of the business activities. Second, she would have signed
the checks in blind compliance with Mr. Gaskins' or Mr. Quinn's
instructions, just as she allowed them to sign her name. Third,
given Mrs. Gaskins' lack of knowledge of the mining business,
lack of knowledge of West Pine's activities specifically, and
lack of experience with corporate bookkeeping, it is unlikely
that information presented in the checkbook would have aroused
her suspicions. See Guth v. Commissioner, 897 F.2d 441 (9th Cir.
1990) (wife who signed organization's checks under husband's
instruction held to have no reason to know of understatement);
Coleman v. Commissioner, T.C. Memo. 1988-538 (wife who had
access to business books-for limited period and who had no
understanding of bookkeeping system held to have no reason to
know). Mrs. Gaskins' knowledge of West Pine's withholding tax
problem in late 1981 did not put Mrs. Gaskins on notice of the
possibility of diversion of corporate receipts. West Pine's
failure to pay the withheld employment taxes to the IRS and the
fact that Mr. Gaskins periodically failed to give his paycheck
to her would have suggested that West Pine had no money, not
that Mr. Gaskins was diverting corporate receipts.
Mrs. Gaskins presented evidence about the lack of
expenditures on household repairs, furnishings, clothes, or
vacations. This evidence demonstrated the Gaskins' inability to
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