25
startup costs. Although we agree that startup expenses can be
expected, we feel that petitioner wife should nonetheless have
inquired as to whether the losses were properly claimed, given
the size of the losses and their continuing nature. There was no
claim that any of this information was kept from her, only that
she did not have any actual knowledge of the nature of the
losses, and apparently did not inquire more than casually. We
are not persuaded by such arguments.
Petitioner wife, an attorney, signed the 1987 tax return.
She undoubtedly noticed that the losses attributable to her
husband's corporation would act to shelter her income. Given the
circumstances, we find that a reasonably prudent taxpayer should
have known that the tax liability stated was erroneous, or that
further investigation was warranted. Park v. Commissioner, supra
at 1298.7 We find that petitioner wife should have investigated
whether the losses were properly deductible.
Since we hold that petitioner wife should have known, or was
on reasonable notice, that the loss was improper, we must
conclude that she does not qualify for treatment as an innocent
spouse under section 6013(e).
Decision will be entered
under Rule 155.
7 Cf. Erdahl v. Commissioner, 930 F.2d 585 (8th Cir. 1991),
revg. T.C. Memo. 1990-101; Chandler v. Commissioner, T.C. Memo.
1993-540, affd. without published opinion 46 F.3d 1131 (6th Cir.
1995).
Page: Previous 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Last modified: May 25, 2011