- 10 -
proving that she qualifies as an innocent spouse. See Lessinger
v. Commissioner, 85 T.C. 824, 838 (1985), revd. on other grounds
872 F.2d 519 (2d Cir. 1989).
The standard in determining whether a taxpayer had "reason
to know" is "whether a reasonable person under the circumstances
of the taxpayer at the time of signing the return could be
expected to know of the omissions." Shea v. Commissioner, 780
F.2d 561, 566 (6th Cir. 1986), affg. T.C. Memo. 1984-310. The
primary ingredients of this test are (1) the circumstances which
face the taxpayer; and (2) whether a reasonable person in the
same position would have reason to know that omissions had been
made. Id. at 565-566. Whether an individual had reason to know
of a substantial understatement is generally regarded as a
question of fact. Id.; Estate of Gryder v. Commissioner, 705
F.2d 336 (8th Cir. 1983), affg. T.C. Memo. 1981-466; Ratana v.
Commissioner, 662 F.2d 220, 224 (4th Cir. 1981), affg. in part
and revg. in part T.C. Memo. 1980-353; Sanders v. United States,
509 F.2d 162, 166 (5th Cir. 1975). We believe that the facts and
circumstances relating to whether Martha knew or had reason to
know of the substantial understatement have not been adequately
developed such that this issue is proper for summary judgment.
In addition, a genuine issue of material fact remains as to
whether it would be inequitable to hold Martha liable for that
substantial understatement. In making a determination of whether
it would be inequitable to hold a taxpayer liable for the
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