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provides for the reallocation of erroneous items to the extent
one spouse received a tax benefit on a joint return and the other
spouse did not.
The Secretary has promulgated regulations prescribing such
rules.3 Section 1.6015-3(d)(2)(i), Income Tax Regs., provides:
“An erroneous item that would otherwise be allocated to the
nonrequesting spouse is allocated to the requesting spouse to the
extent that the requesting spouse received a tax benefit on the
joint return.” This rule applies equally to items that would
otherwise be allocated to the requesting spouse. Hopkins v.
Commissioner, 121 T.C. 73, 82-86 (2003). Section 1.6015-3(d)(5),
Example (5), Income Tax Regs., provides:
Example (5). Requesting spouse receives a benefit
on the joint return from the nonrequesting spouse’s
erroneous item. (i) In 2001, H reports gross income of
$4,000 from his business on Schedule C, and W reports
$50,000 of wage income. On their 2001 joint Federal
income tax return, H deducts $20,000 of business
expenses resulting in a net loss from his business of
$16,000. H and W divorce in September 2002, and on May
22, 2003, a $5,200 deficiency is assessed with respect
to their 2001 joint return. W elects to allocate the
deficiency. The deficiency on the joint return results
from a disallowance of all of H’s $20,000 of
deductions.
(ii) Since H used only $4,000 of the disallowed
deductions to offset gross income from his business, W
benefitted from the other $16,000 of the disallowed
3The regulations are applicable for all elections or
requests for relief filed on or after July 18, 2002. Sec.
1.6015-9, Income Tax Regs. In the case at bar, petitioner
elected relief in the second amendment to petition filed on May
22, 2003.
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