-10-
amount for which there is no basis in fact or law.5 Sec.
6013(e)(2).
To prove that the disallowed deductions have no basis in fact
or law, an individual seeking innocent spouse status is not entitled
to rely on the Commissioner's disallowance of deductions contained
in the notice of deficiency, without introducing further evidence
to establish that a deduction has no basis in fact or law. Douglas
v. Commissioner, 86 T.C. 758, 762-763 (1986).
Petitioner presented no evidence to show that the items
disallowed by respondent were grossly erroneous or that the
deduction claimed for those items had no basis in fact or law. See,
e.g., Douglas v. Commissioner, supra; Neary v. Commissioner, T.C.
Memo. 1985-261.
Further, the items disallowed were not solely attributable to
Mr. Edmondson. Some relate primarily to Glass Onion Records, a
business in which petitioner participated with Mr. Edmondson.
5 The phrase "no basis in fact or law," is not defined in
sec. 6013. The courts, however, have held that a deduction has
no basis in fact when the expense for which the deduction is
claimed was never made, and a deduction has no basis in law when
the expense, even if made, does not qualify as a deductible
expense under well-settled legal principles or when no
substantial legal argument can be made to support its
deductibility. Ness v. Commissioner, 954 F.2d 1495, 1498 (9th
Cir. 1992), revg. 94 T.C. 784 (1990); Douglas v. Commissioner, 86
T.C. 758, 762 (1986). "Ordinarily, a deduction having no basis
in fact or in law can be described as frivolous, fraudulent, or,
* * * phony." Douglas v. Commissioner, supra at 763. A portion
of a deduction may be "grossly erroneous" even if another portion
of the same deduction is allowed. Ness v. Commissioner, supra at
1498-1499.
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