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Where omissions from income are in issue, courts generally
agree that it is actual or constructive knowledge of the
underlying transactions, not of the tax consequences of those
transactions, that is material. Park v. Commissioner, supra at
1293-1294. However, the failure to review a tax return generally
does not absolve a taxpayer of liability. Hayman v.
Commissioner, 992 F.2d 1256, 1262 (2d Cir. 1993), affg. T.C.
Memo. 1992-228. A taxpayer may not generally close his or her
eyes to what is disclosed on the tax return and plead ignorance.
Edmondson v. Commissioner, T.C. Memo. 1996-393; Cohen v.
Commissioner, T.C. Memo. 1987-537. Nonetheless, while a spouse
cannot close his or her eyes to unusual or lavish expenditures,
the spouse is not required to have perfect knowledge of family
financial matters. Belk v. Commissioner, 93 T.C. 434, 441
(1989); Mysse v. Commissioner, 57 T.C. 680, 699 (1972).
Furthermore, "one person's luxury may be another's necessity, and
the lavishness of an expense must be measured from each family's
relative level of ordinary support." Kistner v. Commissioner, 18
F.3d 1521, 1525 (11th Cir. 1994), revg. and remanding T.C. Memo.
1991-463; see also Sanders v. United States, supra at 168.
However, "the alleged innocent spouse's role as a homemaker and
complete deference to the spouse's judgment concerning the
couple's finances, standing alone, are insufficient to establish
that a spouse had no 'reason to know.'" Kistner v. Commissioner,
supra at 1525; see also Stevens v. Commissioner, supra at 1505.
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