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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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