- 14 - items. As more fully explained infra, we conclude that peti- tioner has successfully demonstrated that she is entitled to innocent spouse relief with respect to this item. First, the facts in the record amply demonstrate that the omission is attributable solely to Thomas Dillon. Mr. Dillon handled the Dillon family finances and maintained all the records in the offices at Dillon Securities. It is Mr. Dillon who possessed the knowledge and information necessary to complete the return, and the record is clear that Mr. Dillon alone was responsible for working with the accountants in preparing the return. Accordingly, the failure to include income from this account can be attributed solely to him. Second, petitioner did not have actual or constructive knowledge of the substantial understatement of tax. In cases involving the omission of income, actual or constructive knowledge of the underlying transaction giving rise to omitted income is sufficient to preclude innocent spouse relief. Wiksell v. Commissioner, 90 F.3d 1459 (9th Cir. 1996), revg. and remand- ing T.C. Memo. 1994-99; Price v. Commissioner, T.C. Memo. 1987- 360. Petitioner argues that she did not have actual or construc- tive knowledge of the Murphy Favre account. Petitioner points to the fact that all of the family finances were handled by Thomas Dillon or employees of Dillon Securities, and all account state-Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
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