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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...)
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