- 11 - of some $26,000. The Zimmermans' tax returns reported total income of only $3,376.20 for 1988 and $808.37 for 1989. The returns as filed had very few entries and were rather simple. Had petitioner made even a cursory review of the returns, she would have been alerted to the fact that none of her W-2 income was reported and that at least some income from the business had been omitted. Petitioner had a duty to inquire about these omissions. The total amount of income reported each year was minuscule compared to the amount of money flowing into her household account. Thus even a glance at the tax returns would have put a reasonable person on notice that something was wrong. Petitioner wrote checks for mortgage payments in 1989 that alone totaled $5,191.20. We hold that petitioner knew or had reason to know of the substantial understatements of tax. Therefore, she does not qualify for relief under section 6013(e), and we need not consider whether it would be inequitable to hold her liable. In keeping with the foregoing, Decision will be entered for respondent.Page: Previous 1 2 3 4 5 6 7 8 9 10 11
Last modified: May 25, 2011