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number of examples from caselaw to help us decide where on the
spectrum the case before us lies.
That precedent points us to a few key factors: (a) the
spouse’s education level; (b) her involvement in the family’s
business and financial affairs; (c) the presence of lavish or
unusual expenditures as compared to the family’s past income
levels, income standards, and spending patterns; and (d) the
culpable spouse’s evasiveness and deceit concerning the couple’s
finances. Butler, 114 T.C. at 284.
We note first that Linda’s education ended with high school.
Unlike her husband, she has taken neither college nor business
classes. The Commissioner argues that she continued her
education through life experience by running Dela’s Demos, but
this was a part-time job where she set up tables and passed out
samples at grocery stores. Nothing from that job could
conceivably have provided her with the financial sophistication
to suspect that her husband may have been embezzling money and
hiding some of it offshore.
The second factor is Linda’s involvement in the family’s
financial affairs. Both parties agree that she paid for most of
the everyday expenses out of her checking account and thus
certainly had some general awareness of her family’s financial
situation. The Commissioner argues that Linda’s habit of picking
up the mail from the post office each day meant that she should
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Last modified: May 25, 2011