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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.
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