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constructed their personal residence and remodeled their vacation
home; they paid college expenses for four children; they
vacationed in Europe several times; and they bought numerous new
cars for themselves and their children.
We believe that the ostensible falling off of the Barrancos’
reported income in 1983 and subsequent years was so great, and
the discrepancy between their reported income and their ever-
improving lifestyle so pronounced, as to reasonably put
petitioner on notice of the need to make further inquiry. Cf.
Price v. Commissioner, 887 F.2d 959, 965-966 (9th Cir. 1989).
Petitioner argues that she had no constructive knowledge of
the omitted income because she never reviewed the tax returns
before signing them. Petitioner, however, “cannot be excused for
her failure to review a return she signed under penalties of
perjury, even though it was her habit all during her married life
to sign any document her husband asked her to sign.” Terzian v.
Commissioner, supra at 1170.
In sum, petitioner has failed to establish that a reasonably
prudent person in her position at the time she signed any of the
joint returns could not be expected to know that they contained
understatements or that further investigation was warranted.
III. Section 6015(b)(1)(D) Equity Analysis
Notwithstanding our foregoing conclusions, if we were to
assume, for sake of argument, that petitioner had neither actual
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