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making this argument. King, which set forth for the first time
the actual knowledge standard under section 6015(c) for
deductions, as well as for situations involving section 183, was
decided after the trial was held and during the briefing process
of this case. The contemporaneous decision in that case, coupled
with petitioner’s representation that she thought the horse
activity was a fun thing for Mr. Rowe to do with his son on the
weekends, lead us to conclude that respondent’s position on this
issue was substantially justified.
e. Charitable Contributions
Petitioner and Mr. Rowe claimed charitable contribution
deductions on their 1987, 1988, and 1989 returns for payments to
the church they attended. Respondent allowed the deduction for
1987 but disallowed the deductions for 1988 and 1989 on the
ground that it was not shown that the contributions were made.
Petitioner wrote the checks for the charitable contributions for
1987.
We agreed with respondent that these items were allocable
equally to petitioner and Mr. Rowe because personal deduction
items are generally to be allocated equally between spouses, and
petitioner had failed to establish that a different allocation
was appropriate. However, we rejected respondent’s argument that
petitioner had actual knowledge that the charitable contributions
were not made. We found that Mr. Rowe was in charge of the
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