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reasonable basis for arguing that petitioner had actual knowledge
of the capital gains and, therefore, was not entitled to relief
under section 6015(c) for the portion allocable to Mr. Rowe.
c. Mortgage Interest
In 1987, 1988, and 1990, petitioner and Mr. Rowe overstated
their mortgage interest deductions. The mortgages related to
properties which were in the joint names of petitioner and Mr.
Rowe. At trial, petitioner testified that she was aware that the
residences were jointly titled and that loans were acquired on
these properties. Petitioner acknowledged signing the loan and
deed documents for the properties. Additionally, the evidence in
the record demonstrated that petitioner wrote the checks for the
mortgage payments in 1987 and 1988.
We agreed with respondent that the mortgage interest
deduction items were allocable equally to petitioner and Mr.
Rowe. However, we rejected respondent’s argument that petitioner
had actual knowledge of the overstated deductions. Our findings
were based in large part on the trial testimony of both
petitioner and Mr. Rowe that petitioner was given only the first
two pages of the tax return when signing the return, and she was
not afforded the opportunity to see or review any attachments,
schedules, or other documents pertaining to the return. We held
that petitioner was entitled to relief under section 6015(c) for
the half of the items allocable to Mr. Rowe.
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