- 43 -
Even if we were to conclude that a reasonably prudent person
in petitioner’s position at the time she signed the returns for
the years at issue could not have been expected to know of the
items giving rise to the deficiencies in this case, we would
still conclude that petitioner had failed to satisfy her duty of
inquiry. Petitioner and Mr. Capehart did not make any effort to
verify the most important and most basic facts essential for the
viability of the Hoyt partnership investments and their tax
consequences. For example, they conducted no investigation
whatsoever of whether the Hoyt partnerships in which they were
investing actually owned cattle in sufficient numbers and with
sufficient value to support the projected loss deductions. They
did not ask a knowledgeable tax professional to investigate or
verify that they would have sufficient basis in their Hoyt
partnership investments to claim their distributive shares of
partnership losses. They allowed the promoter of the Hoyt
partnerships to prepare their personal income tax returns, and
they apparently never requested or obtained verification that the
IRA contributions claimed on their joint returns had actually
been made by the contribution deadlines. We conclude, therefore,
that this positive factor does not apply because petitioner had
reason to know of the items giving rise to the deficiency and
failed to satisfy her duty of inquiry with respect to those
items.
Page: Previous 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 NextLast modified: May 25, 2011