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(1988). The record contains no evidence of the organization,
operations, or business plan of Supertaps. Petitioner did not
put on any evidence of the activities and motives of the
Supertaps partnership. Without such evidence, it cannot be
determined whether petitioner and her husband lacked any legal
basis for deducting the Supertaps losses. See Kaye v. Commis-
sioner, T.C. Memo. 1995-345. Therefore, despite petitioner's
assertions to the contrary, we conclude that petitioner has not
proven that there was no basis in fact or in law for deducting
the 1981 loss in connection with the investment in Supertaps.
Accordingly, we find that petitioner has not carried her burden
in proving that the deduction is grossly erroneous.
The 1982 Understatement From Unreported Income
Petitioner also contends that she is entitled to innocent
spouse relief with respect to the 1982 deficiency arising from
$43,158 of unreported income earned on the Murphy Favre account.
Respondent has conceded that this is a grossly erroneous item.
Therefore, in order to prevail, petitioner must prove: (1) That
the substantial understatement is attributable solely to Thomas
Dillon; (2) that petitioner did not know or have reason to know
of the understatement of tax at the time she signed the return;
and (3) that it would be inequitable to hold petitioner liable
for the deficiency resulting from this understatement. Respon-
dent asserts that petitioner has failed to prove each of these
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