Charles R. and Dru L. Haggart - Page 13

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          canceled checks, surely would have reason to know of the expenses           
          paid for in Mr. Haggart’s business.  See Kenney v. Commissioner,            
          T.C. Memo. 1995-431.                                                        
               Mrs. Haggart argues that she did not have reason to know of            
          the disallowed deductions and unreported income because she “just           
          dropped off the typical stuff * * * [documentation] I normally do           
          and just picked it * * * [completed return] up at a later date.”            
          But, Mrs. Haggart provided the accountant, Mr. Poltonowicz, with            
          the documents necessary to prepare the returns, including the               
          Forms W-2 and 1099-MISC and Mr. Haggart’s “list of business                 
          expenses.”  Mrs. Haggart must have reviewed the documents before            
          leaving them with Mr. Poltonowicz.  Otherwise, she could not have           
          known what she gave to him.  Consequently, Mrs. Haggart had                 
          reason to know of the overstated business expenses claimed on the           
          1996 and 1997 Schedules C.                                                  
               Additionally, Mrs. Haggart testified that she does not                 
          recall reviewing the return before signing it.  But, “a spouse              
          cannot obtain the benefits of section * * * [6015] by simply                
          turning a blind eye to--by preferring not to know of--facts fully           
          disclosed on a return, of such a large nature as would reasonably           
          put such spouse on notice that further inquiry would need to be             
          made.”  Levin v. Commissioner, T.C. Memo. 1987-67; see also Cohen           
          v. Commissioner, T.C. Memo. 1987-537.  Mrs. Haggart cannot escape           
          joint and several liability for the large unsubstantiated amounts           
          unambiguously listed on the Schedules C by simply choosing not to           
          review the return.                                                          

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