Estate of Robert E. Sympson, Deceased, Elizabeth C. Sympson Personal Representative and Elizabeth C. Sympson - Page 7

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          there were no loan documents and the supposed "lender" had                  
          another view of the transfers.  Mrs. Sympson signed the 1987                
          return on October 17, 1988.  By that time she knew that her                 
          husband had been accused of theft and fired, and that he and she            
          were being sued for millions of dollars.  Moreover, a lawyer had            
          explicitly warned her of potential tax problems.  The joint                 
          income tax return she signed showed only $49,000 received from              
          Olga Roderick in 1987.                                                      
               Generally, the question of whether a spouse knew or had                
          reason to know of a substantial understatement is governed by               
          whether a "reasonably prudent taxpayer under the circumstances of           
          the spouse at the time of signing the return could be expected to           
          know that the tax liability stated was erroneous or that further            
          investigation was warranted."  Stevens v. Commissioner, 872 F.2d            
          1499, 1505 (11th Cir. 1989), affg. T.C. Memo. 1988-63; see Griner           
          v. Commissioner, 951 F.2d 360 (9th Cir. 1991), affg. without                
          published opinion T.C. Memo. 1990-301; Bokum v. Commissioner, 94            
          T.C. 126, 148 (1990), affd. 992 F.2d 1132 (11th Cir. 1993).                 
               Mrs. Sympson is a college graduate who had owned and                   
          operated an art gallery.  She was not afraid of her husband or              
          mistreated by him.  Trust does not eliminate a spouse's duty to             
          inquire when circumstances indicate further inquiry is necessary.           
          Hayman v. Commissioner, supra at 1262.  We believe a reasonably             
          prudent person in Mrs. Sympson's circumstances would have                   

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