- 14 - shall be allocated to the other spouse filing the joint return to the extent the item gave rise to a tax benefit on the joint return to the other spouse. Section 6015(d)(3)(C) permits the Secretary to allocate items other than in the manner described in 6015(d)(3)(A) if the Secretary establishes that such allocation is appropriate due to fraud of one or both spouses. Congress has authorized the Secretary to prescribe regulations providing methods of allocation other than the methods provided in section 6015(d)(3). Sec. 6015(g)(1); see also S. Rept. 105-174, supra at 56-57, 1998-3 C.B. at 592-593; H. Conf. Rept. 105-599, supra at 251, 1998-3 C.B. at 1005. Congress provided the following guidance regarding the types of alternative methods of allocating items between spouses: Under the bill, allocation of items of income and deduction follows the present-law rules determining which spouse is responsible for reporting an item when the spouses use the married, filing separate filing status. The Secretary of the Treasury is granted authority to prescribe regulations providing simplified methods of allocating items. In general, apportionment of items of income are expected to follow the source of the income. Wage income is allocated to the spouse performing the job and receiving the Form W-2. Business and investment income (including any capital gains) is allocated in the same proportion as the ownership of the business or investment that produces the income. Where ownership of the business or investment is held by both spouses as joint tenants, it is expected that any income is allocated equally to each spouse, in the absence of clear and convincing evidence supporting a different allocation. The allocation of business deductions is expected to follow the ownership of the business. Personal deduction items are expected to be allocated equallyPage: Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Next
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