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provide it, relying instead on her general denial. Due to the
lack of persuasive evidence in the record, and in light of our
concerns with petitioner's credibility, we are simply reluctant
to conclude that petitioner's self-serving denial satisfies her
burden of proof as to this factor.
The fourth factor we consider when assessing whether a
taxpayer had reason to know of the existence of a substantial
understatement at the time he or she signed the return focuses on
whether the taxpayer's spouse was forthright about the omitted
income. Because petitioner did not receive actual knowledge of
the embezzlement income at issue in this case until February
1992, it is clear that Mr. Peterson was evasive with respect to
his embezzlement activities during both taxable years at issue.
However, while the record contains evidence that Mr. Peterson
might have maintained a "secret" checking account, such evidence
is not sufficient to convince us that the funds Mr. Peterson
embezzled were accumulated in that account. To the contrary, it
is clear from the record that during 1990 a large amount of
otherwise unexplained cash flowed through the couple's two joint
accounts managed by petitioner. Accordingly, though petitioner
did not acquire actual knowledge of her former husband's
embezzlement activity until after she signed the joint return for
taxable year 1990, we find that Mr. Peterson did not attempt to
conceal from petitioner the asset acquisitions or other
expenditures made with embezzled funds during that year.
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