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husband to transfer her residence and other
real property. Clearly, Petitioner could not
have understood the possible consequences of
her transfers of real property to the
organization because it was unconscionable
that she would transfer control of the
residence she occupies to persons unknown to
her.
Petitioner was directed to sign documents
by her husband under the belief that she was
helping her son acquire businesses by
providing equity to be used as net worth to
qualify for purchase money financing. Signing
documents as "exchangor" and transferring real
property was the only connection of the
Petitioner to the organization. Petitioner
was neither employed by nor rendered services
to the organization, and was not otherwise
connected with or involved in the organization
whatsoever. Petitioner had no knowledge of
and had no reason to know the affairs of the
organization.
Although petitioner had no role in PFA, she knew that her
husband was involved in obtaining financing with her son and that
she was asked to transfer her real estate interests to PFA. There
is no evidence that petitioner ever inquired as to the significance
of these events, whether at the time of: (1) PFA's creation; (2)
Mr. Muhn's audit; or (3) the tax return's filing. In any case, it
is knowledge of the transactions, not the tax consequences of those
transactions, that is material. Quinn v. Commissioner, 524 F.2d
617, 626 (7th Cir. 1975), affg. 62 T.C. 223 (1974); McCoy v.
Commissioner, 57 T.C. 732 (1972).
Further, although there is no evidence as to petitioner's
lifestyle during 1991, a cursory review of the reported adjusted
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