Kathy A. King - Page 10




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          income.”  Id.  The Court appended to that statement a footnote              
          stating:  “We leave to another day the manner in which the actual           
          knowledge standard will be applied in erroneous deduction cases.”           
          Id. n.6.  Since the taxpayer’s claim for relief in Cheshire was             
          based solely on lack of knowledge of the tax consequences of the            
          unreported income, relief was denied under section 6015(c).  This           
          case involves an erroneous deduction.                                       
               Respondent disallowed the deduction involved in this case              
          because petitioner’s former spouse lacked the necessary profit              
          objective.  Even under prior section 6013(e), where the spouse              
          claiming relief was required to prove lack of knowledge of the              
          item, we said that “the taxpayer claiming innocent spouse * * *             
          [relief] must establish that he or she is unaware of the                    
          circumstances that give rise to error on the tax return, and not            
          merely be unaware of the tax consequences.”  Bokum v.                       
          Commissioner, 94 T.C. 126, 145-146 (1990) (emphasis added), affd.           
          992 F.2d 1132 (11th Cir. 1993).  As previously indicated,                   
          Congress was attempting to expand relief from joint liability               
          when it enacted section 6015.  When a spouse elects relief under            
          section 6015(c), the burden of proving the spouse’s actual                  
          knowledge of the item in order to deny relief is on the                     
          Commissioner.5  We therefore hold that the proper application of            


               5See Culver v. Commissioner, 116 T.C.    (2001) (the                   
                                                             (continued...)           





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