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The following factors have been considered to decide whether
a spouse seeking relief had “reason to know”: (1) The spouse’s
level of education; (2) the involvement of the spouse 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 levels of income, standard of living, and spending
patterns; and (4) whether the culpable spouse was evasive and
deceitful concerning the couple’s finances. Hayman v.
Commissioner, supra at 1261.
Under the holding in Price v. Commissioner, supra, a spouse
may not rely upon ignorance of the law as the basis for relief.
Concerning that point, the Court of Appeals for the Ninth Circuit
explained that
if a spouse knows virtually all of the facts pertaining
to the transaction which underlies the substantial
understatement, her defense in essence is premised
solely on ignorance of law. In such a scenario,
regardless of whether the spouse possesses knowledge of
the tax consequences of the item at issue, she is
considered as a matter of law to have reason to know of
the substantial understatement and thereby is
effectively precluded from establishing to the
contrary. [Citations omitted.]
Price v. Commissioner, supra at 964.
In Hayman v. Commissioner, supra at 1262, the Court of
Appeals for the Second Circuit elaborated on this point as
follows: “In order to qualify * * * [for section 6015 relief]
the spouse must establish that she is unaware of the
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