- 34 -
More importantly, Levy earned substantial income from which
he had adequate funds to pay the reported 1991 through 1995
balance due amounts. On their 1993 return, he and petitioner
reported having a total income of $249,326. On their 1994
return, they reported having a total income of $547,865. The
record further reflects that Levy concealed his gambling problem
from petitioner, and that she did not find out about the severity
of his problem until long after she had signed the 1991 through
1995 returns.
We conclude that petitioner had no knowledge or reason to
know that the reported balance due amounts would not be paid by
Levy. See, e.g., Ewing v. Commissioner, 122 T.C. at 47-48;
Washington v. Commissioner, 120 T.C. at 150-151.
With respect to the 1996 through 1999 balance due amounts,
however, petitioner had reason to know that Levy would not pay
those tax liabilities at the time she signed the returns for
those years. At trial, petitioner claimed that she had no idea
that Levy had not been paying their taxes until sometime in 2001,
after respondent took action to levy upon her real estate
commissions. She confronted Levy and then talked to their
accountant. Yet, petitioner later acknowledged that she signed
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