Lloyd E. Dawson, Jr. - Page 18

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          in such matters prior to March 1989, when he admits he assumed              
          responsibility for writing checks to pay his family’s bills.                
          Perfect knowledge of one’s family’s financial affairs, however,             
          is not required to satisfy the reason to know standard.  Shea v.            
          Commissioner, 780 F.2d 561, 567 (6th Cir. 1986), affg. in part              
          and revg. and remanding in part T.C. Memo. 1984-310; Sanders v.             
          Commissioner, supra at 168.   We conclude that petitioner had               
          sufficient involvement in his family’s affairs to put a                     
          reasonable person in his position on notice that the income                 
          reported in the 1988 return was erroneous or that further inquiry           
          was warranted.  During 1988, Ms. Dawson caused PAHHS and BHHS to            
          issue to her between 13 and 22 payroll checks per month, with the           
          amounts of the checks ranging from $50 to $1,500.  All of the               
          funds embezzled by Ms. Dawson during 1988 were deposited in joint           
          bank accounts over which petitioner had signature authority and             
          on which he wrote checks.  The statements for the accounts were             
          mailed to the residence of petitioner and Ms. Dawson, and he                
          opened and looked at least some of the statements.  Petitioner              
          knew where the statements were kept at their residence, and he              
          could have reviewed them whenever he desired.  Perusal of the               
          bank statements would have alerted petitioner to the actual level           
          of the couple’s income.  Furthermore, the number of deposits of             
          payroll checks made by Ms. Dawson in the accounts and the dollar            
          amount of the deposits reflected in the statements would have               






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