- 20 - Commissioner, 74 F.3d 1528, 1537 (7th Cir. 1996) (quoting Friedman v. Commissioner, 53 F.3d 523, 525 (2d Cir. 1995), affg. in part and revg. in part T.C. Memo. 1993-549), revg. and remanding T.C. Memo. 1994-241. Therefore, petitioner had no reason to suspect that the losses associated with the London straddle were fictitious. Respondent argues that petitioner had a duty to inquire. First, respondent implies that the large deduction on the return should have caused petitioner to inquire as to the source of the deduction. Citing Hayman v. Commissioner, 992 F.2d 1256, 1262 (2d Cir. 1993), affg. T.C. Memo. 1992-228, respondent asserts that “it is well established that a spouse cannot be relieved of liability by turning a blind eye to dramatically large deductions fully disclosed on the returns which would put the spouse on notice that further inquiry would be needed.” In the Court of Appeals for the Eighth Circuit, the court to which this case is appealable, the presence of large deductions, standing alone, is not sufficient to trigger a duty of inquiry; it is a factor that may be considered in the totality of the circumstances.4 See Erdahl v. Commissioner, 930 F.2d at 591. Therefore, we may not impose a duty to inquire based solely on 4We are bound by the Court of Appeals for the Eighth Circuit’s view because of the Golsen rule. See Golsen v. Commissioner, 54 T.C. 742 (1970), affd. 445 F.2d 985 (10th Cir. 1971).Page: Previous 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Next
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