David C. Jonson and Estate of Barbara J. Jonson, Deceased - Page 20

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          we had three kids in college.  We were desperate for some tax               
          relief to make ends meet.”                                                  
                    (d)  Other Spouse’s Evasiveness and Deceit Regarding              
               David made clear during his trial testimony that Barbara was           
          aware of his investments, she had access to all of his files and            
          to his office, and he made no effort to deceive her with respect            
          to his financial affairs.                                                   
                    (3)  Conclusion                                                   
               All the foregoing factors support a finding that Barbara had           
          reason to know of the understatements.  It is significant that              
          Barbara knew (1) of the investment in Vulcan, (2) that it was               
          designed to generate large deductions that, in turn, would result           
          in substantial tax savings, (3) that those deductions were taken            
          on the joint returns for the audit years, and (4) that there was            
          a risk that the deductions might be attacked by respondent and              
          disallowed on audit.  “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, 992           
          F.2d at 1262. See also Price v. Commissioner, 887 F.2d at 964,              
          where the Court of Appeals stated:                                          
               [I]f a spouse knows virtually all of the facts                         
               pertaining to the transaction which underlies the                      
               substantial understatement, her defense in essence is                  

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