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underpayment of 1998 tax in April of 1999. Therefore,
* * * it is difficult to understand and believe that
monetary considerations were prominent in the Krasner
family with a year to date average monthly increase of
over $14,000.00 for 1998 to 1999. Notwithstanding the
testimony of Paul Krasner, his first written assertion
that there was something awry with their finances was
included in * * * [Mr. Krasner’s August 5, 1999 email
to petitioner], which is over four months after the due
date for payment of the taxes at issue. Petitioner
asserts that the true reason for sending the e-mail on
August 5, 1999, was in response to her retaining di-
vorce counsel on or about that time, which she had
previously hoped to avoid by arriving at a harmonious
property settlement and divorce decree.
Both Petitioner and Intervenor testified that Paul
Krasner had expended substantial sums of money on
lavish gifts he purchased for Petitioner during the
taxable year in question with apparent no regard for
any alleged financial inability to afford such at the
time of their purchase. In addition, both the
Intervenor and Petitioner took both separate and joint
vacations during the taxable year in question in the
early part of 1999, again with no apparent regard for
the expense of same. Intervenor, Paul Krasner, also
had prior to 1998 put his very young children on the
payroll of his endodontic practice and, notwithstanding
his professional financial woes, determined that they
were worth somewhere in the range of $265.00 per hour
for secretarial and administrative work. * * * Since
the Intervenor elected to expend money on such
extravagancies as lavish gifts and paying his very
young children such exorbitant salaries, supports the
Petitioner’s justifiable belief that the tax liability
for 1998 would be paid in full at the time that it was
due. This belief was especially reasonable in light of
the glowing periodic and regular financial reports
Intervenor was providing to Petitioner about his prac-
tice. [Reproduced literally.]
On the record before us, we reject petitioner’s position
with respect to the knowledge and reason to know element. As
discussed above, we have found that before petitioner signed the
1998 joint return on April 10, 1999, Mr. Krasner (1) presented
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