Lloyd E. Dawson, Jr. - Page 16

                                       - 16 -                                         
          Park v. Commissioner, supra at 1293-1294; Sanders v. United                 
          States, supra at 169; Bokum v. Commissioner, supra at 146.                  
          Consequently, a spouse who knows or has reason to know of such a            
          transaction does not qualify for relief as an innocent spouse.              
          Park v. Commissioner, supra; Sanders v. United States, supra.  A            
          spouse has “reason to know” of an understatement if                         
               a reasonably prudent taxpayer under the circumstances                  
               of the alleged innocent 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.  * * *  [Park v.                          
               Commissioner, supra at 1293 (citing Sanders v. United                  
               States, supra at 166-167 and n.5.)]                                    
               In deciding the issue, factors we consider include:  (1) The           
          level of education of the spouse seeking relief; (2) the spouse’s           
          involvement in the family’s business and financial affairs; (3)             
          unusual or lavish expenditures made by the family; and (4) the              
          “culpable” spouse’s refusal to be forthright about the couple’s             
          income.  Park v. Commissioner, 25 F.3d at 1293; Sanders v. United           
          States, 509 F.2d at 167-170.  In reaching our decision, we                  
          consider the interplay among the factors, and different factors             
          will predominate in different cases.  Bliss v. Commissioner, 59             
          F.3d 374, 378 (2d Cir. 1995), affg. T.C. Memo. 1993-390.                    
               Turning to the facts of the instant case, we find that, even           
          if, at the relevant time, petitioner did not actually know that             
          Ms. Dawson was embezzling funds from her employers, i.e., the               








Page:  Previous  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  25  Next

Last modified: May 25, 2011