- 24 - b. Actual Knowledge Exception Does Not Apply to Petitioner As previously indicated, if the Commissioner demonstrates that an individual making the election under section 6015(c) had “actual knowledge”, at the time such individual signed the return, of any item giving rise to a deficiency (or portion thereof) which is not allocable to such individual under section 6015(d), the election under section 6015(c) will not apply to such deficiency (or portion). Sec. 6015(c)(3)(C). The Commissioner must prove actual knowledge by a preponderance of the evidence. Culver v. Commissioner, 116 T.C. 189, 196 (2001). Actual knowledge in the case of disallowed deductions consists of “actual knowledge of the factual circumstances which made the item unallowable as a deduction.” King v. Commissioner, 116 T.C. 198, 204 (2001). Actual knowledge of the tax laws or legal consequences of the operative facts are not required. Id.; Cheshire v. Commissioner, 115 T.C. 183, 196-197 (2000), affd. 282 F.3d 326 (5th Cir. 2002). Respondent concedes that he has not proven actual knowledge with respect to the Far West Drilling adjustments that are allocable to Mr. Hopkins. Respondent makes no argument on brief with respect to petitioner’s actual knowledge of the NOL carryforward deductions for 1982 and 1984 attributable to thePage: Previous 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Next
Last modified: May 25, 2011