- 12 -
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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