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knowledge of the factual circumstances which made $13,155
unallowable as a Schedule A itemized deduction. Accordingly, we
hold that petitioner is entitled to relief from joint liability
under section 6015(c) for the portion of this item allocable to
Mr. Rowe.
iii. 1990 Mortgage Interest
Petitioners claimed a home mortgage interest deduction of
$122,526 in 1990. Respondent determined that petitioners’
allowable interest expenses was $98,780 but that 33.1 percent of
this amount should have been reported on Schedule F.18 On the
basis of this determination, respondent allowed a mortgage
interest deduction of $66,105 and disallowed $56,421.19 Thus, in
order to establish actual knowledge, respondent must show that
18The notice of deficiency provides no explanation as to how
this allocation was determined or why 33.1 percent of the
allowable interest expense should have been reported on Schedule
F. At trial, Robert Bamber (Mr. Bamber), the revenue agent
assigned to the examination of petitioners’ 1990 tax return,
testified that he examined the interest expense claimed on
Schedule F, $60,564, and the mortgage interest deduction claimed
on Schedule A, $122,526, and calculated the proportion claimed on
each Schedule in relation to the overall interest amount claimed,
$183,090. On the basis of information reported by other sources,
Mr. Bamber determined that petitioners’ allowable interest
related deduction was $98,780, and he allocated this amount
between the Schedule A and the Schedule F in the same proportion
as the amounts claimed on the 1990 return. Consequently,
respondent limited petitioners’ Schedule A mortgage interest
deduction to $66,105.
19As previously mentioned, the notice of deficiency contains
a mathematical error which benefits petitioners by approximately
$21. For purposes of this issue, we shall use the amounts
determined by respondent in the notice of deficiency.
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