Ronnie D. Wilson and Linda K. Lagadinos, f.k.a. Linda K. Wilson - Page 6

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          I.  Grossly Erroneous Requirement                                           
               Linda must establish that there was a substantial                      
          understatement of tax attributable to grossly erroneous items of            
          Ronnie.  Sec. 6013(e)(1)(B).  A substantial understatement is any           
          understatement that exceeds $500.  Sec. 6013(e)(3).  Any item               
          omitted from gross income is grossly erroneous.  Sec.                       
          6013(e)(2)(A).  In addition, any claim of a deduction in an                 
          amount for which there is no basis in fact or law is grossly                
          erroneous.  Sec. 6013(e)(2)(B).  A deduction has no basis in fact           
          when the expense for which the deduction is taken was not made,             
          and a deduction has no basis in law if the expense is not                   
          deductible under well-established legal principles or if no                 
          substantial legal argument can be made to support its                       
          deductibility.  Douglas v. Commissioner, 86 T.C. 758, 762-763               
          (1986).                                                                     
               Respondent disallowed several of the deductions claimed by             
          petitioners.  Linda contends that Ronnie's inability to                     
          substantiate the amounts claimed on the return provides a                   
          sufficient basis to conclude that the expenses were, in fact,               
          never made.  A taxpayer may not rely on the mere disallowance of            
          a claimed deduction or an inability to substantiate the amount of           
          an otherwise allowable deduction to establish that the deduction            
          had no basis in fact or law.  United States v. Shanbaum, 10 F.3d            
          305, 314 (5th Cir. 1994); Flynn v. Commissioner, supra at 364.              






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