Cheryl Kunsman - Page 10

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          convinced that petitioner did not understand the business and               
          have a sense of the profit therefrom.                                       
               The IRA distribution was reflected on the 1999 Form 1040,              
          which the Court has found to be a joint return.  Petitioner was             
          certainly aware of Mr. Kunsman’s age in 1999.  Thus, petitioner             
          shared with Mr. Kunsman the legal responsibility to ensure the              
          proper reporting of the additional tax on an early distribution             
          pursuant to section 72(t).                                                  
               “A taxpayer is presumed to have knowledge of the tax                   
          consequences of a transaction”.  Cheshire v. Commissioner, 115              
          T.C. 183, 197 (2000), affd. 282 F.3d 326 (5th Cir. 2002).                   
          Ignorance of the law is no defense.  Id. at 196.  In fact,                  
          petitioner acknowledged that both she and her former spouse were            
          aware that a 10-percent additional tax was imposed on early                 
               Based on the entire record, the Court finds that petitioner            
          had actual knowledge of the income from the 1999 IRA                        
          distribution(s).  She also had actual knowledge that an                     
          additional tax is imposed by section 72(t).  Accordingly, she has           
          failed to establish that “she did not know, and had no reason to            
          know, that there was [an] understatement”.  Sec. 6015(b)(1)(C).             

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Last modified: November 10, 2007