- 12 -
be charged with knowing about Jerry’s investment accounts. The
Commissioner believes that this alone should have been enough to
make her suspicious. We disagree. In today’s society, simply
receiving a letter from a financial institution will make a
reasonable person suspect only that her family has somehow made
its way onto a marketer’s mailing list, not that her spouse has
money hidden away. It certainly would not be enough to compel
her to open the statements to check the account balances.
The Commissioner also points to Linda’s receiving checks
from Jerry written from two different accounts. He argues that
this should have caused her to suspect that he had multiple
accounts of his own, concluding again that he must have money
hidden away. We again disagree. Having more than one account is
not necessarily a particularly suspicious act, especially for a
prosperous businessman. Without some other sign of dishonesty,
noticing the different account numbers on the bottom of the
checks would not make a reasonable person in Linda’s position
suspect anything other than Jerry had a business need for more
than one account.
We next look to see if there were large or lavish expenses.
Courts have been careful to consider whether a family's expenses
were reasonable in relation to the income reported on the return.
Barranco v. Commissioner, T.C. Memo. 2003-18. This is based on
the commonsense observation that even a trusting wife should
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011