5
spouse from relief. Stevens v. Commissioner, 872 F.2d 1499, 1504
(11th Cir. 1989), affg. T.C. Memo. 1988-63; Bokum v.
Commissioner, 94 T.C. 126, 138 (1990), affd. 992 F.2d 1132 (11th
Cir. 1993). It is undisputed that the Vriners filed a joint
return and that the return contained a substantial understatement
of tax attributable to grossly erroneous items of Mr. Vriner.
Respondent argues, however, that petitioner knew or had reason to
know of the substantial understatements, and that it would not be
inequitable to hold her liable for the deficiency.
Petitioner testified that she signed the 1987 Federal income
tax return after being directed to do so by Mr. Vriner, and we
are convinced that petitioner was not familiar with the contents
of the return. We find that petitioner had no actual knowledge
of the substantial understatement of tax and, indeed, had no
knowledge of her husband's alleged narcotics activities prior to
the search of their home in 1988. Thus, we must ascertain
whether she had reason to know of the substantial understatement
of tax.
A taxpayer has reason to know of a substantial
understatement of tax if a reasonably prudent taxpayer in his or
her position could be expected to know that the stated tax
liability was erroneous or that further investigation was
warranted. Kistner v. Commissioner, 18 F.3d 1521, 1525 (11th
Cir. 1994), revg. and remanding T.C. Memo. 1991-463; Stevens v.
Commissioner, supra at 1505; Bokum v. Commissioner, supra at 153.
Page: Previous 1 2 3 4 5 6 7 8 Next
Last modified: May 25, 2011