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To the extent that the $704.88 portion of the deficiency
consists of the income Mr. Lepordo received from Signature Flight
Support, the Court finds that petitioner had actual knowledge of
the item since she knew of his employment relationship therewith,
the amount of the income, and his receipt of the income on
account of the Form W-2 enclosed with their 2000 return. See
Cheshire v. Commissioner, 115 T.C. at 194 (finding that the
taxpayer had actual knowledge because she knew about the nature
of the income, the amount, and her spouse’s receipt thereof);
Mitchell v. Commissioner, T.C. Memo. 2000-332 (stating same). To
the extent that the $704.88 portion of the deficiency consists of
other items, petitioner failed to show that she had no knowledge
or reason to know of the items giving rise to the deficiency.
Accordingly, this factor weighs against relief.
Nonelecting Spouse’s Legal Obligation
The IRS will also consider whether the nonelecting spouse
has a legal obligation to pay the outstanding income tax
liability pursuant to a divorce decree or agreement. See Rev.
Proc. 2003-61, sec. 4.03(2)(a)(iv), 2003-2 C.B. at 298. But if
the requesting spouse knew or had reason to know at the time the
agreement was entered into that the liability would not be paid
by the nonelecting spouse, then this factor will not weigh in
favor of relief. Id.
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