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Additionally, a spouse may have a duty to inquire further if he
or she knows enough facts so as to be placed on notice of the
possibility of a substantial understatement. Guth v.
Commissioner, 897 F.2d 441, 444-445 (9th Cir. 1990), affg. T.C.
Memo. 1987-522. Factors to be considered in determining whether
a taxpayer had reason to know within the meaning of section
6013(e)(1)(C) include: (1) The level of education of the spouse
seeking relief; (2) the alleged innocent spouse's involvement in
his or her family's financial and business activities; (3) any
substantial unexplained increase in the family's standard of
living; and (4) the culpable spouse's evasiveness and deceit
about the family's finances. Resser v. Commissioner, supra at
1536. In reaching our decision, we consider the interaction
among these factors, and different factors may predominate in
different cases. Bliss v. Commissioner, supra at 378.
With respect to each taxable year at issue, we find that
petitioner has failed to establish that she had no reason to know
that the return contained a substantial understatement.
We first consider petitioner's level of education. It is
clear from the record, as well as from our observations at trial,
that petitioner is a highly educated, intelligent woman. She
holds undergraduate and graduate degrees from a respected
academic institution. Not only has she taught at the high school
level, but she has been a university professor for nearly 20
years. Despite such accomplishments and experience, however,
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