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business receipts. Intervenor claims that petitioner maintained
business records for Mike’s Painting on her computer and that he
was not involved in keeping the records. Intervenor also claims
that petitioner should be held liable for the deficiency
attributable to the business because joint returns were filed for
1993, and petitioner was responsible for putting together the
information that was used to complete the Schedule C for Mike’s
Painting.
Respondent contends that he cannot demonstrate that
petitioner had “actual knowledge” and, therefore, proposes to
grant petitioner relief under section 6015(c). Respondent argues
that since intervenor has not introduced credible evidence
demonstrating that petitioner had actual knowledge of any item
creating the deficiency, petitioner is entitled to relief under
section 6015(c). Intervenor has filed his notice of intervention
for the purpose of opposing petitioner’s claim for relief under
section 6015. If intervenor can establish that petitioner had
“actual knowledge” of the erroneous business deductions, then
petitioner should not be entitled to relief under section
6015(c).
The relevant inquiry is whether petitioner knew or believed
that the costs and business expenses reported on the 1993 return
were overstated. Rowe v. Commissioner, supra. At trial,
petitioner credibly testified that she was not involved in the
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Last modified: May 25, 2011