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Petitioner was an enterprising individual, savvy enough in
business affairs and bookkeeping to have built the successful
businesses that she operated. We are satisfied, based on the
record in the instant case, that petitioner had the ability to
understand that there was a substantial understatement on the
1981 return and that she was sufficiently put on notice that she
needed to inquire further into the partnership deductions
generating the understatement. Consequently, we hold that
petitioner has failed to prove that she did not have reason to
know that there was an understatement of tax on the return for
the 1981 taxable year and that petitioner is therefore not
entitled to relief as an innocent spouse under section 6013(e).6
To reflect the foregoing,
Decision will be
entered under Rule 155.
6
Because we hold that petitioner had reason to know of the
understatement, we need not address the questions of whether the
Choate Square partnership deductions were grossly erroneous or
whether it would be inequitable to hold petitioner liable for the
deficiency attributable to the understatement.
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