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because return preparer had signed return); Estate of Killian v.
Commissioner, T.C. Memo. 1987-365 (spouse took reasonable steps
to determine the accuracy of the return by questioning husband
about sham losses, who assured her that the losses were due to an
investment recommended by a C.P.A. who prepared the return).
The factors established in Price v. Commissioner, supra, as
to whether the electing spouse had reason to know or a duty to
inquire include the spouse’s level of education, the spouse’s
involvement in family financial affairs, the evasiveness or
deceit of the culpable spouse, and any unusual or lavish
expenditures inconsistent with the family’s ordinary standard of
living. Erdahl v. Commissioner, supra at 591 (quoting Guth v.
Commissioner, supra at 444).
On the facts before us, we find that petitioner did not know
and did not have reason to know of the understatements on the tax
returns when she signed them. Petitioner satisfied her duty of
inquiry by questioning her husband and receiving strong and
repeated assurances from him.
All four factors discussed in Price v. Commissioner, supra,
weigh in favor of granting petitioner relief. Petitioner had no
experience academically or practically regarding business, taxes,
or investments and has worked as an elementary school teacher.
Petitioner’s involvement in the family financial affairs was
limited to paying routine bills out of the joint account. Glenn
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