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Respondent contends that petitioner knew or had reason to
know that the tax liability would not be paid. In support of his
contention, respondent asserts: (1) Petitioner and Mr. Puckett
filed for bankruptcy 1 week before signing their return; (2) when
petitioner signed the return, she had constructive knowledge of
the tax liability shown on the return; and (3) because of their
financial difficulties, petitioner knew that Mr. Puckett would
not pay the tax liability.
Having observed petitioner’s appearance and demeanor at
trial, we find her testimony to be honest, forthright, and
credible. We conclude, however, that petitioner had reason to
know that Mr. Puckett would not pay the liability reported on the
2000 return. Petitioner testified at trial that she knew when
she signed the return that it reported a balance due and that no
payment was remitted with the return. She asserts, however, that
she was urged by her accountant to execute the return because “it
makes for better divorce relations if I [petitioner] sign jointly
and it will reduce the amount he [Mr. Puckett] owes”. Petitioner
further asserts that if she had known she would be liable for Mr.
Puckett’s unpaid tax liability, she would not have filed a joint
return. Notwithstanding, however, petitioner admitted that she
probably knew that there was a good chance Mr. Puckett was not
going to pay the tax liability and that she “definitely didn’t
care how he was going to pay it.” Indeed, petitioner admitted
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