Linda J. Bowen - Page 8

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          Commissioner, 114 T.C. 333, 341 (2000); Rowe v. Commissioner,               
          T.C. Memo. 2001-325; Martin v. Commissioner, T.C. Memo. 2000-346.           
               Respondent did not call Jorgensen to testify.  Respondent              
          failed to prove that, at the time petitioner signed the 1999                
          joint return, she had actual knowledge of the omission of the               
          nonemployee income from the return.                                         
          Conclusion                                                                  
               Petitioner is eligible for relief under section 6015(c), and           
          respondent has failed to nullify her election by demonstrating              
          that she had actual knowledge of the item giving rise to the                
          deficiency at the time she signed the joint return.                         
               Respondent erred in denying petitioner relief under section            
          6015(c).  Petitioner has no liability for the deficiency.                   
               Reviewed and adopted as the report of the Small Tax Case               
          Division.                                                                   

                                                  Decision will be                    
                                             entered for petitioner.                  
















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