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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 equally
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