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Cheshire, like the instance case, involved omitted income.
In that case, the taxpayer’s spouse received, and failed to
report, retirement distribution proceeds. The taxpayer was aware
of the receipt, and amount, of the distribution. We held that a
taxpayer who has actual knowledge of the underlying transaction,
such as the fact of the receipt of income and the amount thereof,
does not satisfy the requirement set out in section
6015(b)(1)(C). See Cheshire v. Commissioner, supra at ___ (slip
op. at 16). In the instant case, petitioner had actual knowledge
of the underlying transaction; she was aware that the
distribution had been received, and she was aware of the amount.
Thus, under the standard established in Cheshire, she does not
satisfy section 6015(b)(1)(C). Because petitioner does not
satisfy section 6015(b)(1)(C), we need not address whether she
satisfies section 6015(b)(1)(B) or (D); she is not entitled to
relief under section 6015(b).2
The statute offers a second opportunity for relief, in
section 6015(c)(1), which provides as follows:
(1) In general.--Except as provided in this
subsection, if an individual who has made a joint
return for any taxable year elects the application of
this subsection, the individual’s liability for any
deficiency which is assessed with respect to the return
shall not exceed the portion of such deficiency
2 Because petitioner knew about the entire transfer refund
distribution, she also is not entitled to an apportionment of
relief under sec. 6015(b)(2).
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