- 22 -
F.2d 561, 565-566 (6th Cir. 1986) (citations omitted),
affg. in part and revg. in part T.C. Memo. 1984-310.]
We believe that petitioner had reason to know of the
understatements under the approaches followed by the Tax Court
and the U.S. Courts of Appeals for the Sixth and Eleventh (which
has adopted the Price approach) Circuits, and any disparity among
them is immaterial to our disposition of this case. See Jonson
v. Commissioner, supra at 116.
3. Result of the Price Approach in This Case
In Price v. Commissioner, supra at 965, the Court of Appeals
for the Ninth Circuit stated:
A spouse has “reason to know” of the substantial
understatement if a reasonably prudent taxpayer in her
position at the time she signed the return could be
expected to know that the return contained the
substantial understatement. Factors to consider in
analyzing whether the alleged innocent spouse had
“reason to know” of the substantial understatement
include: (1) the 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 levels of income, standard of living, and
spending patterns; and (4) the culpable spouse’s
evasiveness and deceit concerning the couple’s
finances. [Citations omitted.]
“The interplay of these factors is dynamic, so that different
factors will predominate in different cases.” Bliss v.
Commissioner, 59 F.3d 374, 378 (2d Cir. 1995), affg. T.C. Memo.
1993-390. One factor may dominate the analysis and alone be
reason for denying relief. Id. at 379.
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