- 23 -
business and family finances to be his domain. We are convinced
that petitioner was unaware of her husband's discussions with Mr.
DiMisa, Mr. Defalco, or his tax attorney concerning the
involuntary conversions. Further, we do not believe that Mr.
Acquaviva told petitioner, or that she knew, of his decision to
ignore the advice of his advisers with regard to the 1986
condemnation.
Respondent contends that petitioner had a duty to inquire
and that she failed to do so. Specifically, respondent argues
that because petitioner knew of the 1985 fire and the 1986
condemnation and the substantial amounts involved, petitioner had
a duty to inquire as to the proper tax treatment of the 1985 and
1986 involuntary conversion proceeds and the constructive
dividends. We think that, under the circumstances presented
here, it was reasonable that petitioner did not ask her husband
about the tax consequences of the involuntary conversion proceeds
and the corporate distributions.8 Petitioner trusted her husband
to do what was best for her and their family, including ensuring
that the family's tax returns were properly prepared and filed.
Petitioner also knew that her husband had a long-standing
8 We also note that, contrary to respondent's belief,
failure to inspect a Federal income tax return does not
automatically preclude innocent spouse relief. See, e.g.,
Terzian v. Commissioner, 72 T.C. 1164, 1171 (1979) ("the fact
that * * * [the taxpayer] signed the return without reading it
does not require the conclusion that she had reason to know of
the omitted income").
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