Marianne Hopkins - Page 9

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          returns she had no reason to know that there were understatements           
          attributable to those items.  See sec. 6015(b)(1)(C); Mora v.               
          Commissioner, 117 T.C. 279, 285 (2001).  An individual has reason           
          to know of the understatement if a reasonably prudent taxpayer in           
          her position at the time she signed the return could be expected            
          to know that the return contained the understatement.  See Price            
          v. Commissioner, 887 F.2d 959, 965 (9th Cir. 1989); Mora v.                 
          Commissioner, supra at 287.                                                 
               Petitioner claims that in signing the returns she had no               
          reason to know of the understatements on the returns because she            
          was unaware of Mr. Hopkins’s investments in Far West Drilling and           
          the other partnerships.  Petitioner’s testimony at trial did not            
          convince us that she was unaware that those investments were made           
          or that Mr. Hopkins concealed his investments from her.9                    
          Further, even a cursory review of the joint returns for 1980,               
          1982, and 1983 would reveal that there were investments in                  
          partnerships for those years and that large partnership                     
          deductions were claimed.  The partnership deductions                        
          substantially reduced petitioner and Mr. Hopkins’s tax                      
          liabilities for those years and, together with other deductions,            

               9Petitioner’s testimony suggests that none of the                      
          partnership investments reported on the joint returns were her              
          own.  However, a Schedule K-1 for Shelter Associates III lists              
          petitioner as a partner in that entity in 1984.                             

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