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ii. Knowledge, or Reason To Know
Petitioner was aware of her income. She claims to be
unaware that her income was omitted from the joint return that
her husband prepared. The spouse seeking relief knows of an
understatement of tax if she knows of the transaction that gave
rise to the understatement. Purcell v. Commissioner, 826 F.2d
470, 473-474 (6th Cir. 1987), affg. 86 T.C. 228 (1986). A
taxpayer seeking to prove that she had no knowledge or reason to
know of an item giving rise to the understatement of tax must
demonstrate that she has fulfilled a “duty of inquiry” with
respect to determining that the correct tax liability was
reported on the return. 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; Cohen v. Commissioner, T.C. Memo.
1987-537. Given that the return was rather straightforward,
requiring only the reporting of wage income with petitioner’s
Forms W-2 attached, we find it difficult to believe that
petitioner did not know or have reason to know that her wage
income was not reported on the return. This factor is also
squarely against petitioner.
iii. Significant Benefit
Petitioner benefited in that she received a portion of the
refund which resulted from the withholding from Mr. Gilliam’s
wages. The overpayment and ultimate refund would have been
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