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slip and discussed with her the purposes for which the retirement
distribution proceeds would be used.
Petitioner also had actual knowledge that interest was earned
on the Austin Telco account. At all times, petitioner was aware of
the balance in this account and frequently wrote checks drawn on
its funds. Moreover, bank statements and a Form 1099, Interest
Income, setting forth the amount of interest earned on the account
were sent to petitioner’s home. Thus, petitioner does not satisfy
the no knowledge of the understatement requirement of section
6015(b)(1)(C). Moreover, because petitioner knew, or had reason to
know, of the entire amount of the retirement distributions and the
interest earned on the Austin Telco account, she is not entitled to
proportionate relief under section 6015(b)(2).
B. Relief Under Section 6015(c)
In general, section 6015(c) allows proportionate tax relief
(if a timely election is made) through allocation of the deficiency
between individuals who filed a joint return and are no longer
married, are legally separated, or do not reside together for a 12-
month period. Such allocation, however, is not permitted if the
Secretary demonstrates that the individual electing relief had
actual knowledge, at the time the return was signed, of any item
giving rise to a deficiency (or portion thereof) which is not
allocable to such individual. See sec. 6015(c)(3)(C). For
purposes of section 6015(c), unlike for purposes of section 6015(b)
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