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second proposed finding might fairly be presumed, together those
two proposed findings demonstrate no more than that petitioner
had knowledge of the source of the unreported Thunder Alley
receipts or, perhaps, had reason to know that Mr. Spruill might
have received those receipts. We cannot conclude on the basis of
those proposed findings of fact that petitioner had actual
knowledge of the omitted Thunder Alley receipts.
It may well have been that, in order properly to prepare her
husband’s invoices and monthly summaries thereof, petitioner had
some knowledge of which customers had paid invoiced amounts, of
whether balances remained on some accounts, and of those
customers to which she would need to send further invoices. From
evidence of such knowledge, we might be able to conclude that
petitioner had actual knowledge of the omitted Thunder Alley
receipts. The record, however, is bare of such evidence.
Petitioner appeared at trial and testified; respondent’s counsel
examined her, but she did not inquire as to the details of the
invoicing procedures. Respondent did not call Mr. Spruill.
Respondent has failed to prove that, at the time petitioner
signed the 1998 joint return, she had actual knowledge of the
omission of the Thunder Alley receipts.
C. Conclusion
Petitioner was eligible to elect relief under section
6015(c), and respondent has failed to nullify the election by
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