Herbert L. Mitchell, deceased, and Ella Marie Mitchell - Page 12




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            Thus, we are faced with the same question under section 6015(c)                            
            that we addressed in Cheshire; namely, whether respondent has                              
            demonstrated4 that petitioner had “actual knowledge * * * of any                           
            item giving rise to a deficiency” within the meaning of section                            
            6015(c)(3)(C).  In Cheshire, we held that section 6015(c)(3)(C)                            
            does not require the Commissioner to show that the electing                                
            spouse had knowledge of the tax consequences arising from the                              
            item giving rise to the deficiency or that the item reported on                            
            the return was incorrect.  Rather, “actual knowledge” for                                  
            purposes of section 6015(c)(3)(C):                                                         
                  is an actual and clear awareness (as opposed to reason                               
                  to know) of the existence of an item which gives rise                                
                  to the deficiency (or portion thereof).  In the case of                              
                  omitted income * * *, the electing spouse must have an                               
                  actual and clear awareness of the omitted income. * * *                              
                  [Cheshire v. Commissioner, supra at ___; fn. ref.                                    
                  omitted (slip op. at 19).]                                                           
                  In the instant case, petitioner had an actual and clear                              
            awareness of the omitted income–-she knew when the transfer                                
            refund distribution was received and the amount of the                                     
            distribution.  Thus, despite the fact that petitioner was not                              
            aware of the tax consequences arising from the transfer refund                             
            distribution, or that her tax return was incorrect,5 under our                             

                  4 We note that in general under sec. 6015(c) the taxpayer                            
            has the burden of proof, see sec. 6015(c)(2), but for purposes of                          
            this provision, the Commissioner has the burden of proof, see id.                          
                  5 Petitioner and Mr. Browne gave conflicting testimony                               
                                                                         (continued...)                





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