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petitioner would suffer economic hardship upon denial of relief.
This factor weighs against granting petitioner relief.
(iii) Knowledge or reason to know. In the case of an
income tax liability that arose from a deficiency, the fact that
the requesting spouse did not know and had no reason to know of
the item giving rise to the deficiency is a factor in favor of
granting relief. Rev. Proc. 2003-61, sec. 4.03(2)(a)(iii)(B).
By contrast, the fact that the requesting spouse knew or had
reason to know of the item giving rise to the deficiency is a
factor weighing against relief. Id. This factor is not weighed
more heavily than other factors; however, it is a strong factor
weighing against relief. Petitioner must establish that she did
not know and had no reason to know about Mr. Rodriguez’s IRA
distribution.
In evaluating whether a spouse had reason to know of an
item, Rev. Proc. 2003-61, supra, provides that we may consider
the spouse’s level of education, any deceit or evasiveness, the
spouse’s degree of involvement in business and household
financial matters, and her business or financial expertise.
See also Price v. Commissioner, 887 F.2d 959, 965 (9th Cir. 1989)
(factors to consider whether a spouse knew or had reason to know
of a substantial understatement include spouse’s level of
education, spouse’s involvement in family’s business and
financial affairs, presence of expenditures that appear lavish or
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