Estate of Robert J. Capehart, Deceased, Ingrid Capehart, Personal Reprensentative, and Ingrid Capehart - Page 1

                                   125 T.C. No. 10                                    

                               UNITED STATES TAX COURT                                

                 REPRESENTATIVE, AND INGRID CAPEHART, Petitioners v.                  
                    COMMISSIONER OF INTERNAL REVENUE, Respondent                      

               Docket No. 9943-97.              Filed November 14, 2005.              

                    H & W filed a joint Federal income tax return for                 
               1994.  R disallowed losses attributable equally to H &                 
               W.  As a result of the disallowance of the losses, R                   
               also disallowed a deduction for medical/dental expenses                
               claimed on the return.  The parties agree that W is                    
               entitled to relief from liability pursuant to sec.                     
               6015(c), I.R.C.  Consequently, W’s liability cannot                    
               exceed the portion of the deficiency properly allocable                
               to her under sec. 6015(d), I.R.C.  The parties disagree                
               as to the amounts of the deficiency and the sec.                       
               6662(a), I.R.C., accuracy-related penalty for 1994 that                
               are to be allocated to W under sec. 6015(d), I.R.C.                    
                    1.  Held:  The disallowed medical/dental expenses                 
               are erroneous items that gave rise to a portion of the                 
               deficiency and must be allocated between H & W in                      
               determining the portion of the deficiency properly                     
               allocable to W under sec. 6015(d), I.R.C.                              

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