-16- understatement and conclude that it would be inequitable to hold Mrs. Marzullo liable for the understatement of tax on her husband's unreported income from the College. Accordingly, Mrs. Marzullo is entitled to innocent spouse relief as to Mr. Marzullo's unreported income from the College. Disallowed Itemized Deductions Finally, we turn to Mrs. Marzullo's innocent spouse claim with respect to the understatement resulting from the disallowed itemized deductions. The record with respect to this issue is scant. No evidence was presented as to the spouse (Mr. and/or Mrs. Marzullo) to whom the disallowed deductions are attributable or whether the deductions are "grossly erroneous items" as defined in section 6013(e)(2). Thus, petitioners failed to prove all the elements necessary for Mrs. Marzullo's entitlement to innocent spouse relief with respect to the understatement resulting from the disallowed itemized deductions. Accordingly, we sustain respondent's determination in this regard. Issue 2. Self-Employment Tax Respondent determined that petitioners owe self-employment tax under section 1401 on MPM's income, contending that the video production business was operated as a sole proprietorship, and that the corporate form should be disregarded. Petitioners claim that the business was operated as a partnership prior to its incorporation on August 31, 1987, and that from August 31, 1987, MPM was a corporation. Petitioners assert that MPM's corporatePage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011