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petitioner regarding his income and expenditures and his illegal
activities. Neither petitioner's actual knowledge, nor her
education and experience alerted petitioner to or gave petitioner
reason to know of the existence of Martin’s embezzlement income.
With regard specifically to the $585,000 erroneously claimed
Keogh deduction, no evidence indicates that petitioner had actual
knowledge of or had reason to know of the erroneous nature of
this claimed deduction for 1983 or of the transactions underlying
the deduction. During the years in issue, nothing occurred in
Martin and petitioner’s lifestyle to put petitioner on notice of
the circumstances giving rise to the erroneously claimed Keogh
deduction.
We conclude, on the facts of this case, that petitioner met
her duty to inquire as to the information reported by Martin on
his and petitioner's Federal income tax returns for the years in
issue and specifically as to the Keogh deduction claimed for
1983. Petitioner did make inquiries of Martin about the family's
costs of living, was not allowed to participate in Martin's
business affairs or the family's financial affairs, was not given
any meaningful opportunity to review the tax returns for the
years in issue, knew that Martin and she had successfully
survived several audits of their returns, including a TCMP audit
for 1979, wherein very low tax liabilities were determined, and
she was subjected to Martin's autocratic and dominating
personality.
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