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A return has “dramatic deductions” where that return sets
forth large tax shelter losses offsetting income from other
sources and substantially reducing or eliminating a couple’s tax
liability. See Hayman v. Commissioner, supra at 1262; Mora v.
Commissioner, supra at 289; Cohen v. Commissioner, supra; Levin
v. Commissioner, supra.
As previously indicated, on their 1979 return, petitioner
and Levy claimed an improper tax shelter loss. This tax shelter
loss offset Levy’s other income and substantially reduced
petitioner’s and his tax liability for 1979. We find that
petitioner has failed to meet her burden of showing, as required
under section 6015(b)(1)(C), that a reasonably prudent taxpayer
in her position at the time she signed the 1979 return would have
no reason to know of the understatement or that no further
investigation was warranted. See Reser v. Commissioner, 112 F.3d
1258, 1267-1268 (5th Cir. 1997), affg. T.C. Memo. 1995-572; Mora
v. Commissioner, supra at 289.7 We hold that petitioner is not
entitled to relief from joint liability for 1979 under section
6015(b).
6(...continued)
6015(b), (c), or (f) for 1979 was filed before July 18, 2002.
See secs. 1.6015-9, 1.6015-1(a)(2), Income Tax Regs.
7 In so finding, we need not decide for purposes of sec.
6015(b) whether: (1) The 1979 understatement is attributable to
erroneous items of Levy, or (2) taking into account all the facts
and circumstances, it is inequitable to hold petitioner liable
for the 1979 deficiency.
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