Magdalena Pacheco - Page 21




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         in managing the finances of Contractor because his education was             
         limited.                                                                     
              Petitioner’s counsel agrees that petitioner was involved in             
         the business.  He argues, however, that the individual                       
         adjustments were small and that petitioner could not have                    
         actually known of every single transaction that had occurred at              
         the time she signed the return.  Under counsel’s reasoning,                  
         petitioner would be required to have a tax professional’s level              
         of expertise for the Court to find actual knowledge under section            
         6015(c)(3)(C).  In Cheshire v. Commissioner, 115 T.C. at 194, the            
         Court rejected this knowledge standard.                                      
              Petitioner testified that she reviewed all canceled checks              
         for Contractor, separated the checks into business related or                
         personal, and made notes of what each check was for.  Petitioner             
         agreed that she knew whether a given expense was business or                 
         personal.  Therefore, she had knowledge of the facts as to                   
         whether an item was allowable as a deduction.  See sec. 1.6015-              
         3(c)(2)(i)(B), Income Tax Regs.  These admissions are sufficient             
         for the Court to find that petitioner had actual knowledge of the            
         pertinent items at the time that she signed the 1997 return.                 
              In addition, respondent asserts that petitioner has held                
         herself out as the owner of Contractor.  In support, respondent              
         produced copies of:  (1) Form 943, Employer’s Annual Tax Return              
         for Agricultural Employees for 1995 and 1996, (2) Form 940-EZ,               







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