Helen M. Korchak - Page 46

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          had reason to know of the understatement in the 1982 joint tax              
          return.  In making that determination, we bear in mind that a               
          requesting spouse has reason to know of an understatement if a              
          reasonably prudent taxpayer under the circumstances of the                  
          requesting spouse at the time of signing a tax return could have            
          been expected to know that the tax liability stated in such                 
          return was erroneous or that further investigation was warranted.           
          Stevens v. Commissioner, 872 F.2d 1499, 1505 (11th Cir. 1989),              
          affg. T.C. Memo. 1988-63; Shea v. Commissioner, 780 F.2d 561, 566           
          (6th Cir. 1986), affg. in part and revg. in part on another                 
          ground T.C. Memo. 1984-310; Bokum v. Commissioner, supra.                   
               In resolving whether in signing a tax return a requesting              
          spouse had reason to know of the understatement in such return,             
          we consider whether the requesting spouse was aware of the                  
          circumstances of the transaction(s) that gave rise to the er-               
          ror(s) in such return.  See Bokum v. Commissioner, supra at 145-            
          146.21  In making that determination, we may examine several                
          factors, including:  (1) The requesting spouse’s level of educa-            
          tion; (2) the requesting spouse’s involvement in the family’s               
          financial affairs; (3) the nonrequesting spouse’s evasiveness and           
          deceit concerning the family’s financial affairs; and (4) the               
          presence of expenditures that are lavish or unusual when compared           
          to the requesting spouse’s past standard of living.  See Stevens            


               21See also Hillman v. Commissioner, T.C. Memo. 1993-151.               




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