- 11 - If an individual who, but for paragraph (1)(C), would be relieved of liability under paragraph (1), establishes that in signing the return such individual did not know, and had no reason to know, the extent of such understatement, then such individual shall be relieved of liability for tax * * * to the extent that such liability is attributable to the portion of such understatement of which such individual did not know and had no reason to know. Upon review of the record, we conclude that petitioner knew the full extent of the understatement. Petitioner testified that, at the time of signing the 1996 joint return, he knew that Ms. Morrison was receiving monthly benefits. Similarly, the record also reflects that, at the time of signing the joint return, petitioner knew that Ms. Morrison applied for and received a lump-sum benefit apart from her monthly benefit. What is unclear is whether petitioner had knowledge of the amount of benefits received by Ms. Morrison. During trial, petitioner and Ms. Morrison provided conflicting testimony as to whether petitioner noted the amount reflected on the benefit statement when Ms. Morrison presented it to the return preparer. In addition, the parties’ testimony conflicts as to whether the parties discussed the specific amount of the benefit award. The preponderance of evidence supports our holding that petitioner had knowledge of the full amount of the benefit award. Petitioner encouraged and prodded Ms. Morrison into applying for benefits and assisted her in the application and reconsideration process. The assistance he provided made him aware that Ms.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
Last modified: May 25, 2011