Ruthe G. Ohrman - Page 23

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          allocable to the taxpayer as provided in section 6015(d).  Sec.             
          6015(c)(1).  Under section 6015(d)(3)(A), generally, any items              
          that give rise to a deficiency on a joint return, e.g., the                 
          unreported early distributions from the Dean Witter account,                
          shall be allocated to the individual filing the return in the               
          same manner as it would have been allocated if the individual had           
          filed a separate return for the taxable year.                               
               A taxpayer is eligible to elect the application of section             
          6015(c) if, at the time the election is filed, the taxpayer is              
          legally separated from the individual with whom the taxpayer                
          filed the joint return to which the election relates.  Sec.                 
          6015(c)(3)(A)(i)(I).  Furthermore, the election under section               
          6015(c) must not be made later than 2 years after the date on               
          which respondent has begun collection activities with respect to            
          the taxpayer making the election.  Sec. 6015(c)(3)(B).                      
          Respondent does not contend that petitioner’s election under                
          section 6015(c) was untimely.  Therefore, petitioner is eligible            
          to elect the application of section 6015(c) to limit her                    
          liability for the 1999 tax deficiency.                                      
               The issue with which we are faced in this case, however,               
          deals with the application of section 6015(c)(4) to the transfer            
          of assets from Mr. Ohrman to petitioner pursuant to the                     
          separation agreement.  Specifically, we must decide whether the             
          amount of the 1999 tax deficiency for which petitioner can be               

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