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Cheshire v. Commissioner, supra, established that actual
knowledge of the disputed item of income and the amount thereof
prevents a taxpayer from claiming innocent spouse relief under
section 6015(c). With those principles and Charlton as our
backdrop, we must determine whether petitioner is entitled to
innocent spouse relief under section 6015(c)(3)(C).
Petitioner contends that respondent’s showing of her minimal
or superficial knowledge about Mr. Martin’s transfer of shares in
Primera and of the sale of Primera land is insufficient to meet
the statutory threshold necessary to deny her section 6015(c)
relief. Respondent argues that petitioner’s attendance at the
shareholders’ meeting 1 year prior to the filing of the return in
question and learning that the Primera property was sold to
Twentieth Century Life for $22,500,000 constitutes actual
knowledge of the item giving rise to the deficiency.
In Charlton v. Commissioner and Cheshire v. Commissioner,
supra, the nonelecting spouse received an amount of income from a
business or as a lump sum from a distribution of retirement
benefits of which the electing spouse was aware. Here,
petitioner and her spouse did not receive any cash or property.
The “Primera” transaction involved a complex series of steps that
resulted in the transfer of stock and the sale of property which
was structured to qualify as a nontaxable transaction under
section 351 for Federal tax purposes. Without petitioner’s
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