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F.3d 1128, 1136-1137 (11th Cir. 1994) (citing Sturm v.
Commissioner, T.C. Memo. 1993-172), affg. T.C. Memo. 1993-17.
With regard to the first element of the innocent spouse
provision (namely, whether the item in question is attributable
only to the other spouse), petitioner, whose testimony generally
we regard as credible, did not recall even knowing of the
existence of the defined benefit plan and the life insurance
policies. No evidence indicates to the contrary. Petitioner
derived no actual benefit from either the defined benefit plan or
the life insurance, and the defined benefit plan and the life
insurance policies were forfeited under the forfeiture agreement.
We conclude that, for purposes of the grossly erroneous
requirement of the innocent spouse provision, the $585,000
erroneously claimed Keogh deduction is attributable solely to
Martin and not to petitioner.
With regard to the second element of the innocent spouse
provision (namely, whether the claimed innocent spouse had reason
to know of the understatement), among the factors that are
generally relevant are the following: (1) The alleged innocent
spouse's level of education; (2) the alleged innocent spouse's
involvement in the relevant business and financial affairs;
(3) the presence of expenditures that appear lavish or unusual
when compared to the taxpayer’s and the family’s level of income,
standard of living, and spending patterns in prior years; and
(4) the culpable spouse's evasiveness and deceit concerning the
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