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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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