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requirement of section 6013(e)(1)(C) and that she was entitled to
relief under section 6013(e).
Although this case involves a different statute, we believe
that the Court of Appeals would require an analysis of the
“reason to know” requirement like the one it used in Price v.
Commissioner, supra. Consequently, we first examine whether
petitioner had reason to know of the items giving rise to the
deficiency, applying the same factors used by the Court of
Appeals in Price. If we conclude that petitioner did not have
reason to know, we next examine whether petitioner had knowledge
of sufficient facts to impose upon her a duty of inquiry.
Finally, we examine whether petitioner satisfied her duty of
inquiry.
In this case, petitioner, who had in Germany what appears to
be the equivalent of a high school education in this country, was
actively involved in the family’s financial affairs. She wrote
and signed most of the checks drawn on the joint checking
account, and she was aware of, and sometimes participated in,
decisions regarding family purchases. At trial, petitioner
admitted that Mr. Capehart never concealed or deceived her about
the family finances or their Hoyt partnership investments.
With respect to the Hoyt partnership investments, petitioner
admitted that she had had the opportunity to review the
promotional materials that she and Mr. Capehart had received
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