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return. Because petitioner did not conduct such an inquiry,
respondent contends that she failed to discharge her duty to
inquire. Consequently, respondent maintains that, at the time
she signed her 1991 return, petitioner knew or had reason to know
that such return contained a substantial understatement.
We find respondent's argument in this regard unpersuasive.
We reject her assertion that petitioner was obligated wholly to
discard the trust and confidence she had in Mr. Peterson simply
because he had engaged in prior illegal activity. However,
petitioner bears the burden of proof on this issue, and she has
fallen short in carrying that burden. Rule 142(a); Welch v.
Helvering, 290 U.S. 111 (1933); see Purcell v. Commissioner, 826
F.2d at 473; Sonnenborn v. Commissioner, 57 T.C. at 381-383
(1971). Petitioner's argument with respect to taxable year 1991
is bootstrapped to her argument with respect to taxable year
1990. She maintains that she lacked reason to know of the
understatement for 1991 because her husband's embezzlement
activities took place at his law office and not at the couple's
residence. For reasons explained earlier in this opinion, we
find this argument unpersuasive. Petitioner has provided little
convincing evidence in this case, and her arguments are cursory
and attenuated. Moreover, although petitioner testified that
she questioned the staff at Mr. Peterson's office about the
embezzlement, she failed to corroborate that testimony. Because
petitioner's testimony in this regard is self-serving and
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