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into signing the returns, she was intimidated by Mr. Aude because
she feared being physically abused if she refused. Petitioner
testified that she didn't have "any right" to question Mr. Aude,
and if she did, she feared she "would be physically attacked."
From this, she learned that she had to skirt issues with Mr.
Aude, or face his wrath. Petitioner testified that if she "had
not felt intimidated by [Mr. Aude], [she] might have had the
option of going through" the returns. We find this to be a
factor explaining why petitioner did not review or inquire about
the returns.
Considering all of the circumstances, we conclude that
petitioner did not know facts that put her "on notice" of the
understatement. We find that a reasonably prudent person under
petitioner's circumstances, at the time of signing the returns,
could not be expected to know that Mr. Aude's deductions would
give rise to a substantial understatement of tax or that further
investigation was warranted. Petitioner has satisfied the
section 6013(e)(1)(C) requirement.
Section 6013(e)(1)(D) Equitable Considerations
The final question is whether, taking into account the facts
and circumstances, it would be inequitable to hold petitioner
liable for deficiencies attributable to the substantial
understatements. Sec. 6013(e)(1)(D); see sec. 1.6013-5(b),
Income Tax Regs. Relevant factors include significant benefits
received as a result of the understatement of the spouse claiming
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