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King v. Commissioner, 116 T.C. 198, 203 (2001). The “knowledge
standard” for purposes of section 6015(c)(3)(C) “‘is an actual
and clear awareness (as opposed to reason to know) of the
existence of an item which gives rise to the deficiency (or
portion thereof).’” King v. Commissioner, supra at 203 (quoting
Cheshire v. Commissioner, 115 T.C. 183, 195 (2000), affd. 282
F.3d 326 (5th Cir. 2002)). “‘In the case of omitted income * *
*, the electing spouse must have an actual and clear awareness of
the omitted income.’” Id. Respondent concedes that he cannot
demonstrate petitioner had actual knowledge of the items giving
rise to the deficiencies. However, if intervenor offers
sufficient evidence that petitioner had “actual knowledge” of the
omitted gross receipts, then petitioner should not be entitled to
relief under section 6015(c).
Intervenor alleges that petitioner had actual knowledge of
the omitted gross receipts because she controlled the Bank One
account. As discussed above, intervenor controlled the Bank One
account, not petitioner. Additionally, intervenor controlled all
of the business records, prepared the tax returns for the years
at issue, did not allow petitioner to review the tax returns, and
forged petitioner’s signature on the tax returns. We find that
petitioner had no actual knowledge of the omitted gross
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