- 9 - account of the 7.5-percent floor. See sec. 213(a). Their agreed proper adjusted gross income is $65,668. Only medical and dental expenses exceeding 7.5 percent ($4,925.10) of the adjusted gross income are deductible. Since the amount of petitioners’ medical and dental expenses ($3,280) did not exceed the threshold amount ($4,925.10), petitioners are not entitled to any deduction for medical/dental expenses. Consequently, the $1,143 medical/dental expense deducted on the joint return is an erroneous item giving rise to part of the deficiency for 1994. The parties have not informed the Court as to how petitioner and Mr. Capehart would have reported the $1,143 of medical/dental expenses if they had filed separate returns. The regulations provide that deduction items such as medical and dental expenses that are unrelated to a business or investment are generally allocated 50 percent to each spouse unless the evidence shows that a different allocation is appropriate. Sec. 1.6015- 3(d)(2)(iv), Income Tax Regs. Thus, we will allocate $571.50 of the disallowed medical and dental expenses to each of petitioner and Mr. Capehart.2 2We are mindful that because the amounts of the erroneous Form 4797 loss and the theft loss attributed to petitioner exceed her share of the spouses’ combined taxable income for 1994, the portion of the deficiency for which petitioner remains liable would be the same if all of the medical/dental expenses were allocated to Mr. Capehart. Failure to include the disallowed medical/dental expenses in the erroneous items, however, would (continued...)Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011