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deficiency. In order to resolve the issue, we must examine
whether and to what extent petitioner had reason to know of the
factual basis for respondent’s adjustment to the Hoyt partnership
loss deductions and the IRA deductions claimed by petitioner and
Mr. Capehart during the years at issue.
At the time she filed her petition, petitioner resided in
Nevada. In the absence of a stipulation to the contrary, the
U.S. Court of Appeals for the Ninth Circuit is presumably the
proper venue for an appeal of this case. See sec. 7482(b)(2).
In Price v. Commissioner, 887 F.2d 959, 963 (9th Cir. 1989), the
Court of Appeals for the Ninth Circuit interpreted language
contained in section 6013(e), the predecessor to section 6015(b),
in order to decide whether the taxpayer requesting relief under
section 6013(e) (the requesting spouse) had satisfied the
requirement of section 6013(e)(1)(C) that, in signing the return,
the requesting spouse did not know or have reason to know of the
substantial understatement. The Court of Appeals concluded that
the plain meaning of section 6013(e)(1)(C) was clear and that it
required the requesting spouse “to establish that she did not
know and did not have reason to know that the deduction would
give rise to a substantial understatement.” Id. After
concluding that the requesting spouse did not have actual
knowledge, the Court of Appeals examined whether the requesting
spouse had reason to know of the substantial understatement. Id.
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