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spouse at the time of signing the return could be expected to
know that the tax liability stated was erroneous or that further
investigation was warranted.’” Id. at 590 (quoting Stevens v.
Commissioner, 872 F.2d 1499, 1505 (11th Cir. 1989), affg. T.C.
Memo. 1988-63).
Even if a spouse is not aware of sufficient facts to give
her reason to know of the substantial understatement, she
nevertheless may know enough facts to put her on notice that an
understatement exists. Price v. Commissioner, supra at 965. The
question to ask is whether “a reasonably prudent taxpayer in her
position [would] be led to question the legitimacy of the
deduction.” Guth v. Commissioner, 897 F.2d 441, 445 (9th Cir.
1990) (citing Price v. Commissioner, supra at 975) (emphasis
removed), affg. T.C. Memo. 1987-522).
A spouse electing relief may satisfy the duty to inquire by
questioning the deductions and receiving assurances as to their
legitimacy. Erdahl v. Commissioner, supra at 590 n.7. These
assurances may come from the electing spouse’s husband. See
Price v. Commissioner, supra at 966 (duty of inquiry satisfied
where spouse questioned husband about large deductions who
assured her that the returns were prepared by a C.P.A.); Foley v.
Commissioner, T.C. Memo. 1995-16 (spouse satisfied duty of
inquiry by asking husband about tax shelter deductions, hearing
that she should not worry because he invested in tax shelters and
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