Rosemarie Meyer - Page 19

                                       - 19 -                                         
          74 F.3d 1528, 1540 (7th Cir. 1996), revg. T.C. Memo. 1994-241               
          (petitioner wife did not have reason to know there was                      
          substantial understatement where, despite the relative size of              
          deductions vis-a-vis income, a consistent adjusted gross income             
          was reported on returns over the years, the returns at issue                
          involved the "complex financial world" of trading losses, and               
          there was no appreciable difference in living standard from prior           
          years).  Accordingly, we further hold that Mrs. Meyer had a duty            
          to inquire.  Price v. Commissioner, 887 F.2d at 965-966; Park v.            
          Commissioner, T.C. Memo. 1993-252, affd. 25 F.3d 1289 (5th Cir.             
          1994).                                                                      
               The extent of the putative innocent spouse's duty to inquire           
          may be inversely proportional to the complexity of the items at             
          issue.  In Friedman, the disallowed deduction involved the                  
          labyrinthine world of tax shelters, and the Court held a mere               
          inquiry of her husband by the relief-seeking spouse entitled her            
          to relief under section 6013(e).  Friedman v. Commissioner, 53              
          F.3d at 531; see Epstein v. Commissioner, T.C. Memo. 1996-239.              
          In the instant case, however, the deduction at issue merely                 
          involves business expenses, which Mrs. Meyer failed to show were            
          complex financial transactions.  See Resser v. Commissioner,                
          supra at 1538.                                                              
               Petitioner claims that her inability to understand taxes,              
          her lack of business orientation, and the fact she did not                  
          advance beyond high school should preclude the imputation of                




Page:  Previous  8  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  25  26  27  Next

Last modified: May 25, 2011