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The erroneous items giving rise to the 1994 tax deficiency
total $42,565 ($37,239 Form 4797 loss + $4,183 theft loss +
$1,143 medical/dental expenses) and are attributed equally to
petitioner and Mr. Capehart; i.e., $21,282.50 to each. We refer
to the erroneous items attributed to petitioner and Mr. Capehart
respectively as her or his erroneous items. Since all erroneous
items giving rise to the deficiency for 1994 are attributed
equally to petitioner and Mr. Capehart, under the general rule,
petitioner would be liable for one-half of the deficiency
($4,112.50). See sec. 6015(d)(1), (3)(A); sec. 1.6015-
3(d)(4)(i)(A), Income Tax Regs.
2. Tax Benefit Exception
Section 6015(d)(3)(B) provides an exception to the general
rule under section 6015(d)(3)(A) that an item giving rise to a
deficiency on a joint return is allocated to the spouses filing a
joint return in the same manner as it would have been allocated
if the spouses had filed separate returns for the taxable year.
Section 6015(d)(3)(B) provides that, under rules prescribed by
the Secretary, an item giving rise to a deficiency that is
attributable to one spouse must be allocated to the other spouse
“to the extent the item gave rise to a tax benefit on the joint
return” to the other spouse. In essence, section 6015(d)(3)(B)
2(...continued)
increase the portion of the deficiency for which petitioner would
remain liable.
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