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deceit concerning the couple’s finances. Price v. Commissioner,
supra; Stevens v. Commissioner, 872 F.2d 1499, 1505 (11th Cir.
1989), affg. T.C. Memo. 1988-63.
A spouse cannot obtain the benefits of innocent spouse
protection “<by simply turning a blind eye to--by preferring not
to know of--facts fully disclosed on a return, of such a large
nature as would reasonably put such spouse on notice that further
inquiry needs to be made.’” Price v. Commissioner, supra at 965-
966 (quoting Levin v. Commissioner, T.C. Memo. 1987-67). If a
duty of inquiry arises and is not satisfied by the spouse, then
constructive knowledge of the understatement may be imputed to
that spouse. Price v. Commissioner, supra.
As set out above, in this case, the tax returns signed by
Mrs. Barnhill, during some of the years in which substantial
improvements were being made to petitioners’ personal residence,
claimed substantial losses and reported large negative amounts of
adjusted gross income. A reasonably prudent taxpayer in
Mrs. Barnhill’s situation would thus have been put on notice of
and would have had a duty to inquire about the claimed tax
losses. Because she failed even to look at the returns that she
signed, Mrs. Barnhill failed to satisfy her duty of inquiry. Cf.
Pietromonaco v. Commissioner, 3 F.3d 1342 (9th Cir. 1993), revg.
T.C. Memo. 1991-361, in which the Court of Appeals for the Ninth
Circuit concluded that, even if the wife had reviewed the return
in question, the difference between the reported expenditures and
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