Fredie Lynn Charlton - Page 15

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          be legally separated from, the individual with whom he or she               
          filed the joint return and must have elected the applicability of           
          section 6015(c) not later than 2 years after the date on which              
          collection activity began.  See sec. 6015(c)(3).                            
               An electing spouse bears the burden of proving how much of             
          any deficiency is allocable to him or her.  See sec. 6015(c)(2).            
          An election is not valid if respondent shows that the individual            
          making the election had actual knowledge when signing the return            
          of any “item” giving rise to a deficiency (or portion thereof)              
          which is not allocable to the electing individual.  See sec.                
          6015(c)(3)(C).  The only Medi-Task item causing a deficiency in             
          this case is omitted income.                                                
               We have concluded that Charlton should have known of the               
          omitted income because he knew of and had access to correct                 
          information about Medi-Task.  See par. C-2, above.  However, that           
          does not mean that he actually knew of the Medi-Task omitted                
          income.  Charlton did not check Medi-Task’s bank records against            
          the lists of Medi-Task revenue that Hawthorne prepared and gave             
          him.  The lists Hawthorne gave Charlton are not in the record.              
          Charlton testified that he did not know of the omitted income.              
          We have no reason not to believe him.  We conclude that                     
          respondent has not shown that Charlton had actual knowledge of              
          the item causing the deficiency, and that Charlton qualifies for            







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