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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 levels of income, standard of living, and
spending patters; and (4) the culpable spouse’s
evasiveness and deceit concerning the couple’s
finances. [Citations omitted.]
Under the Price approach, a spouse’s knowledge of the transaction
underlying the deduction is not irrelevant; the more a spouse
knows about a transaction, “the more likely it is that she will
know or have reason to know that the deduction arising from that
transaction may not be valid.” Price v. Commissioner, supra at
963 n.9.
In the present case, petitioner was acquiring a college
education during the years in issue. She was involved in her
family’s financial affairs, and she participated in the decision-
making process with respect to large expenditures. There is no
evidence of evasiveness or deceit by Mr. Barnes. In fact, in
this case petitioner was involved in the Hoyt investment, she
knew the investment was designed to generate substantial tax
savings, she knew that those savings were derived from positions
taken on the joint returns for the years in issue, and the
investment materials clearly and repeatedly indicated that the
tax benefits would almost assuredly be disputed by the IRS.
“Tax returns setting forth large deductions, such as tax
shelter losses offsetting income from other sources and
substantially reducing or eliminating the couple’s tax liability,
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