- 24 - petitioner. Indeed, all of the embezzled funds were deposited in and disbursed from joint checking accounts to which petitioner had access and with respect to which statements were available to him. Under the circumstances of the instant case, a reasonably prudent person would have seriously questioned the gross income reported in the joint return petitioner and Ms. Dawson filed for 1988, and petitioner, therefore, had a duty of inquiry with respect to the correctness of the reported income, a duty that he failed to discharge. Park v. Commissioner, 25 F.3d at 1293; Sanders v. United States, 509 F.2d at 167. We accordingly find, based on the entire record, that petitioner knew or had reason to know of the substantial understatement of tax on the 1988 return resulting from the omission of the income embezzled by Ms. Dawson during such year. The next matter we consider is whether it would be inequitable to hold petitioner liable for the deficiency attributable to the omission of the funds embezzled by Ms. Dawson from the 1988 return. Sec. 6013(e)(1)(D). In deciding the issue, we take into account all of the facts and circumstances. Id.; sec. 1.6013-5(b), Income Tax Regs. A factor to be considered is whether the person seeking relief significantly benefited, directly or indirectly, from the omitted income.9 9 Although sec. 6013(e)(1)(D), since its amendment in 1984, no (continued...)Page: Previous 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Next
Last modified: May 25, 2011