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Therefore, the Court must ascertain whether she had "reason to
know" of the facts giving rise to the substantial understatement.
We hold that petitioner had reason to know of the substantial
understatement of tax on her joint return as a result of the
$19,753 deduction. As stated in Price v. Commissioner, 887 F.2d
at 965:
Such notice is provided if the spouse knows sufficient
facts such that a reasonably prudent taxpayer in her
position would be led to question the legitimacy of the
deduction. * * * In such a scenario, a duty of
inquiry arises, which, if not satisfied by the spouse,
may result in constructive knowledge of the
understatement being imputed to her. * * *
First, the Court attributes constructive knowledge of the
contents of the return at issue to Mrs. Meyer, despite her claim
that she signed the return without reading it. Hayman v.
Commissioner, 992 F.2d at 1262; Bokum v. Commissioner, 94 T.C. at
148.
Mrs. Meyer's constructive knowledge of the contents of the
return, in conjunction with her affluent surroundings, the amount
of money passing through her personal accounts for 1989, and the
negative amount of taxable income on her return, placed her on
notice that an understatement existed. Had petitioner even
cursorily glanced at the return, she would have seen that her
reported adjusted gross income was a mere $16,247 and that the
amount of tax due was $0. See Friedman v. Commissioner, 53 F.3d
at 531; Hayman v. Commissioner, 992 F.2d at 1262; Price v.
Commissioner, 887 F.2d at 966. Compare Resser v. Commissioner,
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