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During 1987, petitioner delivered, installed, and programmed
computerized bookkeeping and payroll systems for PAHHS and BHHS
in the offices of BHHS. Petitioner taught the employees of PAHHS
and BHHS to use the systems. During 1988, Ms. Dawson used the
systems to embezzle funds from her employers. Petitioner also
installed computers in the offices of other corporations operated
by Dr. Constant. Petitioner also worked as a “handyman” for
BHHS, setting up offices and moving furniture and boxes.
The third factor we consider is the presence of unusual or
lavish expenditures by petitioner’s family. A taxpayer claiming
relief as an innocent spouse cannot close his or her eyes to
unusual or lavish expenditures that might have alerted him or her
to unreported income. Terzian v. Commissioner, 72 T.C. 1164,
1170 (1979); Mysse v. Commissioner, 57 T.C. 680, 699 (1972). The
presence of unusual or lavish expenditures may put a taxpayer on
notice that it is probable that income is being omitted from a
joint return. Estate of Jackson v. Commissioner, 72 T.C. 356,
361 (1979).
The overall amount of spending by petitioner and Ms. Dawson
during 1988 should have put petitioner on notice that it was
probable that income was omitted from their 1988 return.
Petitioner and Ms. Dawson wrote checks on the joint checking
account with Mid County during 1988 that totaled $146,752.26.
During 1988, petitioner and Ms. Dawson wrote checks on the joint
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