Herbert L. Mitchell, deceased, and Ella Marie Mitchell - Page 10

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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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