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know of that understatement. On the record before us, however,
petitioner’s contention cannot be sustained.
Taxpayers seeking to prove that they had no knowledge or
reason to know of an item giving rise to an understatement of tax
must demonstrate, at a minimum, that they have fulfilled a “duty
of inquiry” with respect to determining whether their correct tax
liability was reported on the return for the year for which they
seek relief. Stevens v. Commissioner, 872 F.2d 1499, 1505 (11th
Cir. 1989), affg. T.C. Memo. 1988-63; Butler v. Commissioner, 114
T.C. at 284. When taxpayers fail to fulfill their duty of
inquiry, they are ordinarily charged with constructive knowledge
of any understatements on their returns. See Hayman v.
Commissioner, 992 F.2d 1256, 1262 (2d Cir. 1993), affg. T.C.
Memo. 1992-228; Cohen v. Commissioner, T.C. Memo. 1987-537 (the
provisions providing relief from joint and several liability are
“designed to protect the innocent, not the intentionally
ignorant”).
Petitioner was aware that the first amended joint return was
filed to correct the omission of the entire amount of the gain
that she realized on the sale of the New York apartment on
Schedule D of the original joint return, and she signed a blank
check for Apostle to use to pay the income tax liability reported
on that return. Petitioner failed, however, to question Apostle
as to the manner in which her income was treated on the first
amended joint return upon her return home from California in June
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