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Mr. Hendricks dominated the financial side of the marriage
with petitioner playing a minor role in the family’s finances.
Petitioner did not participate in any of Mr. Hendricks’s business
activities. Although Mr. Hendricks was not deceitful regarding
their finances, he did not consult with petitioner about making
the investment in Boulder Oil and Gas and did not disclose that
the investment had been made. Moreover, petitioner played a
minimal role in the preparation of the tax returns. The only
information petitioner provided was a list of personal and
household expenses. She relied upon Mr. Hendricks to provide the
remainder of the information.
The Hendrickes have led frugal lifestyles. We find no
evidence in the record that the Hendrickses made any lavish or
unusual expenditures during the relevant years.
Considering all of the circumstances concerning the joint
1983 tax return, a reasonably prudent taxpayer under petitioner’s
circumstances–-living a modest life, raising a family of five
children, uninvolved in the financial affairs of the family, and
without any financial background–-at the time of signing could
not be expected to know about the understatement attributable to
Mr. Hendricks’s investment in Boulder Oil and Gas.
Is there, however, a duty of inquiry? In order for
petitioner’s duty of inquiry to arise, she must first harbor
doubts about the accuracy of the return. Stevens v.
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