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v. Commissioner, T.C. Memo. 2003-91; Rev. Proc. 2000-15, sec.
4.02, 2000-1 C.B. at 448.
Respondent argues that petitioner could not have reasonably
believed intervenor would pay the tax due because she and
intervenor already had an unpaid liability for the taxable year
1997;7 however, petitioner testified, and the Court agrees, she
was unaware of the unpaid liability from 1997 at the time she
signed the 1998 return. Petitioner testified that, although
intervenor sometimes “spent money foolishly”, he told her he had
enough money from the proceeds of his painting business to cover
the 1998 tax liability.
The Court finds that petitioner had virtually no involvement
with intervenor’s business. She had a high school education and
no further business or bookkeeping training. An accountant
maintained intervenor’s books and took care of his business
expenses. Although petitioner was an authorized signatory on
intervenor’s business account, she testified this was only to
enable her to sometimes pay their mortgage note out of the
business account because intervenor did not draw a regular
salary. The extent of her knowledge of intervenor’s business
dealings was that the account held enough to pay the mortgage.
7The unpaid liability from taxable year 1997 was fully
satisfied in 2001 through the offsetting by respondent of
overpayments from petitioner and intervenor’s 1999 and 2000
Federal income taxes. See supra note 2.
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