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Grossly Erroneous Items
To be entitled to relief as an innocent spouse, Mrs. Jones
must show that it the substantial understatement of tax is
attributable to grossly erroneous items. Sec. 6013(e)(1)(B).
Respondent concedes that, except for certain distributions
of property, the items of omitted income are attributable to
petitioner. Therefore, these items are grossly erroneous. Sec.
6013(e)(2)(A).
However, we find that the claimed deduction in 1991 for the
bad debt loss is not a grossly erroneous item. In order to be a
grossly erroneous item, deductions must have been claimed without
any basis in fact or law. Deductions disallowed for lack of
substantiation are not per se "grossly erroneous". Douglas v.
Commissioner, 86 T.C. 758, 763 (1986).
Mrs. Jones has not shown that the deductions disallowed by
respondent were disallowed for the reason that the losses had
never in fact been incurred or that there was no basis in law for
the deductions. The deductions were disallowed solely for lack
of substantiation. Petitioner testified about the Johnsons'
default but offered no evidence regarding losses from "J.
Bradley" and "Ext Wall Vent". Petitioner maintained throughout
that the Johnsons had defaulted on the note, and that he had
sought payment and attempted collection, but other than
petitioner's testimony, there was no evidence to substantiate the
claim. The understatement of tax attributable to the claim for
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