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credible and persuasive. Combined with Michael’s testimony and
the other evidence in this case, we conclude that respondent has
not satisfied his burden of proving by a preponderance of the
credible evidence that Michael had actual knowledge of
Christine’s embezzlement income, and we conclude that Michael
qualifies for relief under section 6015(c).
Respondent argues that the family expenditures, home
improvements, Michael’s fishing and hunting trips, and the
deposits into the joint checking account should have, and would
have, given Michael actual knowledge of the embezzled income. We
find respondent’s arguments as to what Michael should have known
to be misplaced. As stated and as we have held, the standard
under section 6015(c) is actual knowledge, and respondent has the
burden to prove Michael’s actual knowledge by a preponderance of
the evidence. Further, respondent’s burden of proof under
section 6015(c)(3)(C) is not met by mere proof of what a
reasonably prudent person would be expected to know.3
Arguably, the deposits into petitioners’ joint bank account,
in particular, would indicate that Michael should have been aware
of some source of the deposits greater than his and Christine’s
wages and that Michael should have inquired as to what that
source was (particularly in light of Christine’s prior
3 We do not intend to suggest that in an appropriate case
respondent’s burden to prove actual knowledge may not be
established by circumstantial evidence.
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