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record presented that she was well aware of and condoned the
aggressive tax positions advocated by her husband and Mr. Graham.
On brief, petitioners repeatedly reference the quote: “Mere
knowledge that the spouse has invested in a tax shelter resulting
in substantial tax savings is accordingly, without more,
insufficient to establish constructive knowledge of a substantial
understatement”. Friedman v. Commissioner, 53 F.3d 523, 531 (2d
Cir. 1995), affg. in part and revg. in part T.C. Memo. 1993-549.
The comparison simply is not apt. Not only is the premise
factually distinguishable on the record before us revealing
extensive involvement, the case is also legally distinguishable
in that it addresses the standard in an erroneous deduction
context and expressly highlights that different rules apply for
an omission of income situation. Id. at 530. Furthermore,
petitioners chose not to quote the court’s statement that “an
innocent spouse is one who despite having made reasonable efforts
to investigate the accuracy of the joint return remains ignorant
of its illegitimacy.” Id. at 525. As just mentioned, the
evidence here is silent on any such efforts.
On this record, petitioners have failed to establish that
Mrs. Richardson did not have reason to know of the
understatement. Accordingly, Mrs. Richardson is not entitled to
relief under section 6015(b)(1), as the requisites of that
provision are stated in the conjunctive. Nonetheless, for the
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