Fredie Lynn Charlton - Page 5




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          expenses and for self-employment tax related to Medi-Task are               
          allocable jointly to Hawthorne and Charlton.                                
          A.   Whether the $2,050 of Unclaimed Medi-Task Expenses Are                 
               Allocable Solely to Hawthorne                                          
               Charlton contends that the unclaimed Medi-Task expenses are            
          allocable both to him and Hawthorne.  We disagree.  Items giving            
          rise to a deficiency on a joint return are allocated to the                 
          individuals filing the return in the same manner as if the                  
          individuals had filed separate returns.  See sec. 6015(d)(3)(A);            
          Internal Revenue Service Restructuring and Reform Act of 1998,              
          Pub. L. 105-206, sec. 3201, 112 Stat. 734; H. Conf. Rept. 105-              
          599, at 250-251 (1998), 1998-3 C.B. 747, 1004-1005.  “The                   
          allocation of business deductions is expected to follow the                 
          ownership of the business.”  S. Rept. 105-174, at 57 (1998),                
          1998-3 C.B. 537, 593.  Thus, Medi-Task deductions are allocable             
          solely to Hawthorne because only she owned Medi-Task.                       
               Section 6015(d) provides that only “items giving rise to the           
          deficiency” are allocated as if the individuals had filed                   
          separate returns for the taxable year.  See sec. 6015(d)(3)(A).4            


               4  Sec. 6015(d)(3)(A) provides:                                        
               (d) Allocation of deficiency.                                          
                    For purposes of subsection (c)--                                  
                                                                                     
          *      *      *      *      *      *      *                                 
                    (3)  Allocation of items giving rise to the                       
               deficiency.--For purposes of this subsection --                        
                         (A)  In general.  Except as provided in                      




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