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return in the same manner as it would have been allocated
if the individuals had filed separate returns for the
taxable year. [Emphasis added.]
The text of section 6015(d)(3)(A) implies that an “item giving rise
to a deficiency” is an item on the return rather than a underlying
transaction or activity because an amount on a return can be
allocated, i.e., split, but an underlying transaction or activity
cannot.
Thus, the legislative history accompanying enactment of section
6015(c) clearly shows that Congress intended the knowledge
requirement to mean knowledge that the return is incorrect, not
knowledge that there was an income-producing activity or
transaction. See S. Rept. 105-174, at 59 (1998), H. Conf. Rept.
105-599, at 253 (1998). The majority fails to apply that standard.
See majority op. at 20.
The majority’s reliance on the TEFRA partnership rules
(sections 6231 and 6245) to construe “item” is not persuasive
because those sections do not speak to the interpretative issue we
face under section 6015(c)(3)(C).
III. The Majority Disregards the Requirement in the Conference
Report That the Commissioner Prove That the Putative Innocent
Spouse Knew That an Item on the Return Was “Incorrect”
As stated above, the majority holds that, in omitted income
cases, section 6015(c)(3)(C) does not require actual knowledge on
the part of the electing spouse as to whether the entry on the
return is or is not correct. See majority op. at 20.4
4 The majority also suggests another standard; i.e., that
(continued...)
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