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about the deduction and obtained sufficient assurance that the
deduction was appropriate, she satisfied her duty of inquiry.
Id. Therefore, the Court of Appeals granted Patricia’s claim
for relief from joint and several liability. The Court of
Appeals specifically distinguished other cases in which the
requesting spouse failed to question the legitimacy of the
deduction: “We therefore distinguish this case from one in which
the tax court denied relief to a spouse seeking relief who simply
ignored a large deduction and who refused to make inquiries.”
Id.
In the case at hand, we are satisfied that petitioner did
not have actual knowledge of the facts giving rise to the
disallowance of the losses. There was conflicting testimony
concerning whether petitioner had any involvement in the
Shorthorn partnership. Intervenor testified that petitioner had
knowledge and was involved in the decision to participate in the
Shorthorn partnership. Conversely, petitioner denied that she
had any involvement in or knowledge of the investment, claiming
that she left the matter entirely in intervenor’s hands.
Even if we accepted intervenor’s testimony as true, we would
find that neither petitioner nor intervenor knew the facts that
made the flowthrough losses from the partnership unallowable as
deductions on their joint returns. Indeed, neither petitioner
nor intervenor understood the nature of their investment or the
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