Debra Anne Banderas - Page 19

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          bankruptcy on May 1, 1992, and received a discharge on May 23,              
          1997.  This Court concluded that, while the taxpayer lacked                 
          knowledge or reason to know that the taxes for 1989 would not be            
          paid, she knew or had reason to know that the 1990 and 1991                 
          liabilities would be unpaid because the return for 1990 preceded            
          the bankruptcy petition by only a little over 7 months and the              
          return for 1991 was filed during pendency of the bankruptcy case.           
               In Morello v. Commissioner, T.C. Memo. 2004-181, the                   
          taxpayer’s husband lost his job in 1992, and she returned to work           
          after more than 20 years as a homemaker, in order to help relieve           
          resultant financial difficulties.  By the time tax returns for              
          1992 through 1995 were signed and filed in 1996, financial                  
          pressures, including mortgage foreclosure proceedings and the               
          fact that her husband was contemplating and then did file for               
          bankruptcy, had continued to plague the family for a number of              
          years.  Because the taxpayer was aware of these circumstances, we           
          held that she had not established that it was reasonable for her            
          to believe that the balances shown as due on the returns would be           
               Given the foregoing, the Court cannot conclude that the                
          facts of this case are consistent with a reasonable belief that             
          the taxes would be paid.  Accordingly, petitioner has not shown             
          that, at the times she signed the 1997 and 1999 returns, she had            
          no knowledge or reason to know that the taxes would not be paid.            

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