- 18 -
knowledge of their contents. See Hayman v. Commissioner, supra
at 1262; Terzian v. Commissioner, 72 T.C. 1164, 1170 (1979).
Petitioner is thus deemed to have known that, in 1981, the tax
shelter investments resulted in losses totaling $368,675 compared
to her husband’s law firm and royalty income of $456,645.
Similarly, petitioner is charged with knowledge that her
husband’s 1982 income from such sources of $370,263 was offset by
tax shelter losses of $228,133. “Tax returns setting forth large
deductions, such as tax shelter losses offsetting income from
other sources and substantially reducing * * * the couple’s tax
liability, generally put a taxpayer on notice that there may be
an understatement of tax liability.” Hayman v. Commissioner,
supra at 1262; see also Levin v. Commissioner, T.C. Memo. 1987-
67. We find that the size of the losses claimed on the return
should have alerted petitioner to question their legitimacy.11
Where a spouse has a duty to inquire as to the legitimacy of
a deduction, the failure to satisfy such duty may result in
constructive knowledge of the understatement being imputed to
her. See Price v. Commissioner, 887 F.2d at 965; see also Levin
v. Commissioner, supra. A spouse cannot obtain relief from joint
11 The investment tax credits generated by the tax shelter
investments and carried back by petitioners to prior tax years
(including years prior to their marriage) with respect to which
petitioners filed joint and separate Forms 1045 would seemingly
have provided petitioner with an additional justification to seek
more information regarding the investments.
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