112 T.C. No. 14
UNITED STATES TAX COURT
JOHN D. SHEA, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket Nos. 10841-95, 23549-96. Filed April 1, 1999.
P and his wife filed joint returns for 1990 and
1991. P submitted a delinquent return for 1992 that
was filed as a joint return. R determined that P
underreported business receipts for 1990, 1991, and
1992 based on deposits to P's bank accounts and also
disallowed business deductions claimed on P's returns.
In the notice of deficiency for 1992, R determined that
P's proper filing status for 1992 was married filing
separately.
Even though P and his wife remained married
throughout 1992, R did not allocate one-half of P's
income for 1992 to P's wife pursuant to California
community property law. Sec. 66(b), I.R.C., authorizes
R to disallow the benefits of any community property
law to P if P acted as if he were solely entitled to
the income in question and failed to notify his wife of
the nature and amount of such income. On brief, R
relies exclusively on sec. 66(b), I.R.C., as
justification for denying the benefits of community
property law to P. However, R's notice of deficiency
contained no reference to sec. 66(b), I.R.C., nor did
it refer to any facts that would support a sec. 66(b),
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