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intervenor deposited the omitted income into one of these secret
accounts, without her knowledge, to pay for the expenses of his
other women.
One factor that respondent may rely on in demonstrating that
petitioner had actual knowledge is whether she made a deliberate
effort to avoid learning about the item in order to be shielded
from liability. See sec. 1.6015-3(c)(2)(iv), Income Tax Regs.
Intervenor did not appear at trial to testify, and there is no
suggestion that petitioner made a deliberate effort to avoid
learning of the omitted income. Moreover, respondent has not
presented any evidence to show that the omitted income was
deposited into the bank account that petitioner held jointly with
intervenor, or that petitioner otherwise had an actual and clear
awareness of the omitted income.
Petitioner contends that she never saw any Forms 1099 for
the omitted income. Petitioner testified that there was a sewage
leak in her home during 2000, and she and her children moved to
temporary housing from May to December of 2000. Petitioner
further testified that intervenor “was taking care of everything”
and that she had no access to any mail that was sent to her home
address during this period. According to petitioner, she was
unaware of the omitted income and the attendant tax liability
until she called the IRS regarding an unrelated tax issue in
January of 2004.
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