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issue. Therefore, we sustain respondent's determinations and
discuss the grossly erroneous and inequitability requirements in
greater detail below.
A. Grossly Erroneous Requirement
Under section 6013(e)(1)(B), Mrs. Vega must establish that
there was a substantial understatement of tax attributable to
grossly erroneous items of Mr. Vega in 1988 and 1989. Respondent
concedes that for each year there was a substantial
understatement attributable to items of Mr. Vega. As a result,
we need only consider whether the items were grossly erroneous.
Respondent determined that the 1988 return understated gross
income from Schedule E by $1,952. Because all items omitted from
gross income are considered grossly erroneous, the $1,952
understatement satisfies this requirement. Sec. 6013(e)(2);
Flynn v. Commissioner, 93 T.C. 355 (1989).
Respondent also disallowed claimed Schedule C deductions
totaling $64,725 in 1988 and $26,421 in 1989. The deductions
will be considered grossly erroneous only if Mrs. Vega proves
they had no basis in fact or law. Sec. 6013(e)(2). She did not
produce any evidence on this point. Mrs. Vega cannot rely on the
mere disallowance of the deductions or her inability to
substantiate them to establish a lack of basis in fact or law.
Douglas v. Commissioner, 86 T.C. 758, 763 (1986); Portillo v.
Commissioner, T.C. Memo. 1990-68, revd. in part, affd. in part,
and remanded 932 F.2d 1128 (5th Cir. 1991). Consequently, she
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