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spouse.13 Sec. 6015(c)(3)(C). In cases involving erroneous
deductions, an individual is deemed to have actual knowledge of
an item giving rise to a deficiency if she has actual knowledge
of the factual basis for the denial of the deductions. King v.
Commissioner, 116 T.C. 198, 204 (2001). Although the requesting
spouse bears the burden of proving the portion of the deficiency
that is properly allocable to her, see sec. 6015(c)(2), the
Commissioner bears the burden of proving that the requesting
spouse had actual knowledge of any items giving rise to the
deficiency, sec. 6015(c)(3)(C).
2. Reasonableness of Respondent’s Position
Respondent contends that the position taken in his answer to
petitioner’s petition was substantially justified because the
information available to the Appeals officer at the time “showed
that petitioner had knowledge of and had been involved with the
Hoyt organization to some degree”, and petitioner had not
verified Mr. Bulger’s death by providing a death certificate.
Respondent further contends that his position was substantially
justified because, without further factual development, it was
impossible to determine whether petitioner had actual knowledge,
to confirm that no disqualified assets had been transferred to
13An election under sec. 6015(c) is also invalid if the
Secretary demonstrates that assets were transferred between the
individuals filing the joint return as part of a fraudulent
scheme. Sec. 6015(c)(3)(A)(ii).
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