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1. Whether unclaimed Medi-Task expenses totaling $2,050
are allocable to Hawthorne. We hold that they are.
2. Whether the self-employment tax deduction resulting
from self-employment tax attributable to the unreported Medi-Task
income is allocable to Hawthorne. We hold that it is.
3. Whether respondent’s determination that Hawthorne is
entitled to relief under section 6015(f) was an abuse of
discretion. We hold that it was not.
Background
Charlton and Hawthorne were married in 1989. They filed a
joint tax return for 1994 on which they reported income from a
medical transcription business called Medi-Task and deducted
rental cabin expenses.
Respondent determined a deficiency for 1994 based in part on
unreported Medi-Task income, self-employment tax related to Medi-
Task, a $2,050 deduction for Medi-Task expenses which Charlton
and Hawthorne had not deducted, and rental cabin expense
deductions which respondent denied.
Charlton and Hawthorne were divorced in 1996. Hawthorne
received Medi-Task, and Charlton received the rental cabins as a
part of their divorce settlement.
Charlton and Hawthorne filed petitions disputing
respondent’s determination and alleging that they each qualified
for relief under section 6015. We held that Medi-Task income was
self-employment income allocable to Hawthorne under sections 6017
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