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Petitioner and Ms. Valentine were divorced on July 27, 2000,
and petitioner’s election for innocent spouse relief was made
shortly after his receipt of the statutory notice of deficiency.
Therefore, petitioner is eligible to elect the application of
section 6015(c).
Relief under section 6015(c), however, is not available if
respondent demonstrates that the requesting spouse had actual
knowledge, at the time the return was signed, of any item giving
rise to a deficiency (or portion thereof) that is not allocable
to such individual. Sec. 6015(c)(3)(C); Hopkins v. Commissioner,
121 T.C. 73, 86 (2003); Cheshire v. Commissioner, supra at 193-
194. The knowledge requirement under section 6015(c)(3)(C) does
not require the requesting spouse to possess actual knowledge of
the tax consequences arising from the item giving rise to the
deficiency. Hopkins v. Commissioner, supra; Cheshire v.
Commissioner, supra at 194; sec. 1.6015-3(c)(2), Income Tax Regs.
Rather, the statute mandates only a showing that the requesting
spouse actually knew of the item on the return that gave rise to
the deficiency (or portion thereof), without regard as to whether
he knew of the tax consequences. Mitchell v. Commissioner, supra
at 805; Cheshire v. Commissioner, supra.
The item giving rise to the deficiency is the distribution.
At the time when the distribution was made, petitioner signed a
spousal consent, which evidenced that he knew and consented to
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