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be unaware of the circumstances which gave rise to the omissions.
Purcell v. Commissioner, 86 T.C. 228, 238 (1986), affd. 826 F.2d
470 (6th Cir. 1987). The spouse seeking relief must demonstrate
lack of both actual and constructive knowledge of the omission such
that a reasonable person could not be expected to know that the tax
liability stated was erroneous or that further inquiry was
necessary. Stevens v. Commissioner, 872 F.2d 1499, 1504-1505 (11th
Cir. 1989), affg. T.C. Memo. 1988-63.
Mrs. Zaban's claim that she knew nothing, nor had any reason
to know, about Mr. Zaban's illegal activities, is not credible
given the record before us. To be sure, Mrs. Zaban knew that Mr.
Zaban had been convicted in 1978 of bookmaking with Mr. Neumyer and
that Messrs. Zaban and Neumyer continued to deal with each other on
a regular basis, both in person and on the telephone, throughout
the years in issue. Mrs. Zaban also knew that Mr. Zaban traveled
frequently to Las Vegas and Atlantic City. Mrs. Zaban was aware
that Mr. Zaban did not work regular hours, and that he made or
received unusually high volumes of telephone calls. Further, Mrs.
Zaban knew that Mr. Zaban worked only in their basement where he
kept betting records and other gambling paraphernalia, tape
recorders hard-wired to the telephone lines, and a toolbox for
storing large amounts of cash, all of which were readily visible to
anyone who passed through the basement.
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