- 20 - Moreover, although the foregoing failure to meet the attribution prong of section 6015(b)(1)(B) is a sufficient basis on which to deny relief under that subsection, we point out for the sake of completeness that other requisites of section 6015(b) are equally unfulfilled on the facts before us. In particular, section 6015(b)(1)(C) mandates that the requesting spouse have had neither knowledge nor reason to know of the understatement at the time the return was signed. A requesting spouse is considered to have reason to know in this context if a reasonably prudent taxpayer in his or her position, at the time the return was signed, could be expected to know that the return contained an understatement or that further investigation was warranted. Butler v. Commissioner, supra at 283. Hence, the spouse seeking relief has a “duty of inquiry”. Id. at 284. In applying the foregoing “reason to know” standard, factors considered relevant include: (1) The alleged innocent spouse’s level of education; (2) the spouse’s involvement in the family’s business and financial affairs; (3) the presence of expenditures that appear lavish or unusual when compared to the family’s past income levels, income standards, and spending patterns; and (4) the culpable spouse’s evasiveness and deceit concerning the couple’s finances. [Id.] Here, the return at issue was signed on August 12, 1996, and reported total income of $108,547. As of that date, the evidence regarding petitioner’s knowledge in general and the majority of the above factors in particular is in many respects inconsistentPage: Previous 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Next
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