Marianne Hopkins - Page 13

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          affairs, we believe that she, as a reasonably prudent taxpayer,             
          should have at least made inquiries concerning the large                    
          partnership deductions.  “‘Tax returns setting forth large                  
          deductions, such as tax shelter losses offsetting income from               
          other sources and substantially reducing or eliminating the                 
          couple’s tax liability, generally put a taxpayer on notice that             
          there may be an understatement of tax liability.’”  Mora v.                 
          Commissioner, 117 T.C. at 289 (quoting Hayman v. Commissioner,              
          992 F.2d 1256, 1262 (2d Cir. 1993), affg. T.C. Memo. 1992-228).             
               We are not convinced that Mr. Hopkins exercised such                   
          dominance over petitioner that she could not question the                   
          reporting of significant deductions.  Petitioner has failed to              
          establish that she did not have reason to know of the                       
          understatements attributable to the Far West Drilling deductions            
          for 1982 and 1983.15  Petitioner is not entitled to relief under            
          section 6015(b) for the tax liabilities attributable to those               
          items.                                                                      
               2.  Section 6015(c)                                                    
               Under section 6015(c)(1), if an individual who has made a              
          joint return for any taxable year elects the application of this            
          subsection, the individual’s liability for any deficiency which             
          is assessed with respect to the return shall not exceed the                 


               15Petitioner and Mr. Hopkins have maintained close ties to             
          one another.  He still uses a portion of petitioner’s house as an           
          office, and he also performs maintenance services.                          




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