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In order for a spouse's duty of inquiry to arise, she must
first harbor doubts about the accuracy of the return. Stevens v.
Commissioner, supra at 1507. A spouse may be put on notice of
the understatement if a reasonably prudent person "in her
position would be led to question the legitimacy of the
deduction." Price v. Commissioner, supra at 965. One relevant
factor looks at the extent to which family expenditures, about
which the spouse had knowledge, exceed reported income. Hammond
v. Commissioner, T.C. Memo. 1990-22, affd. 938 F.2d 185 (8th Cir.
1991). Other factors include a spouse's specific and detailed
knowledge of the transaction giving rise to the deduction and the
spouse's involvement in the family's financial affairs. Shea v.
Commissioner, 780 F.2d 561, 567 (6th Cir. 1986), affg. in part,
revg. in part, and remanding in part T.C. Memo. 1984-310.
Physical or mental abuse may be a factor in considering innocent
spouse relief. Kistner v. Commissioner, 18 F.3d 1521, 1526 (11th
Cir. 1994), revg. and remanding T.C. Memo. 1991-463; Makalintal
v. Commissioner, T.C. Memo. 1996-9.
"Tax returns setting forth large deduction, such as tax
shelter losses offsetting income from other sources and
substantially reducing or eliminating the couple's tax liability,
generally put a taxpayer on notice that there may be an
understatement of tax liability." Hayman v. Commissioner, supra
at 1262. The Audes claimed the following loss deductions arising
from Magnum: $99,015 in 1980; $105,103 in 1981, and $114,731 in
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