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Paris, petitioner opened a bank account (the account). At trial,
petitioner testified that she did not want to open the account,
but her friend insisted. Petitioner claims that her girlfriend
even gave her the $3,000 with which to open the account.
Petitioner claims the reason she opened the account was so she
could be "a lady of the '80s". Coincidentally, petitioner
testified that deposits could also be made to the account from
the Bahamas, the very location from which Emmens, her then-
husband, was smuggling narcotics. Furthermore, the husband of
petitioner's girlfriend was also involved in the drug business
with Emmens.
Thus, we reject petitioner's argument that the substantial
understatement was attributable solely to Emmens' grossly
erroneous items. We find that petitioner assisted Emmens in drug
smuggling and enjoyed the benefits of the illegally generated and
unreported income. Petitioner did not satisfy this second
requirement and is not entitled to innocent spouse relief.
Knowledge of Understatements on the Returns
Assuming however, arguendo, that petitioner satisfied the
grossly erroneous requirement, she still is not entitled to
innocent spouse status. To be entitled to relief as an innocent
spouse, petitioner must show that, in signing the joint returns
for the years in issue, she did not know and had no reason to
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