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evidence that the electing individual 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”. Sec. 6015(c)(3)(C); Culver v. Commissioner,
116 T.C. 189, 195 (2001); Cheshire v. Commissioner, 115 T.C. 183
(2000), affd. 282 F.3d 326 (5th Cir. 2002).
Here, respondent does not contest that petitioners were not
members of the same household during the 12-month period before
electing relief and that the omitted income and disallowed
deductions are allocable to Mr. Sowards to the extent that Ms.
Sowards did not have actual knowledge. Our inquiry then focuses
on whether respondent has shown that Ms. Sowards had actual
knowledge, at the time she signed the joint returns, of “any item
giving rise to a deficiency (or portion thereof)”.36 Sec.
6015(c)(3)(C).
(a) Omitted Income
Respondent argues that Ms. Sowards had actual knowledge of
the omitted income since she received WPA checks from her husband
and knew that her husband made payments out of the WPA bank
account for personal expenses, like tuition, mortgage payments,
etc. We articulated the “actual knowledge” standard in omitted
36Sec. 6015(c)(3)(C) places the burden of proof on
respondent with regard to whether the electing spouse had actual
knowledge of the items in question. Culver v. Commissioner, 116
T.C. 189, 195 (2001).
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