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Respondent did not refund the $5,688 overpayment reflected
on the joint return but instead issued a “pre-filing notification
letter” that the refund was “suspended”.
Respondent issued petitioner and Mr. Capehart a notice of
deficiency dated March 28, 1997. In the notice of deficiency,
respondent, inter alia, disallowed the $37,239 loss claimed on
Form 4797, Sale of Business Property (the Form 4797 loss), and
the $4,183 theft loss claimed on the return. Petitioners now
agree that they are not entitled to deduct these losses in 1994.
The Form 4797 loss and the theft loss are related to petitioner’s
and Mr. Capehart’s participation in a partnership formed,
promoted, and operated by Walter J. Hoyt III. These losses are
attributable equally to petitioner and Mr. Capehart.
Discussion
As a general rule, spouses filing joint Federal income tax
returns are jointly and severally liable for all taxes due. Sec.
6013(d)(3). Section 6015 provides three alternative grounds for
granting relief from joint and several liability. First, section
6015(b) provides for traditional relief from joint and several
liability for a tax deficiency following the model of former
section 6013(e). Second, section 6015(c) provides for an
allocation of liability for a tax deficiency. Finally, section
6015(f) provides for relief from liability for any unpaid tax or
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