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deductions used to offset her wage income. Therefore,
$4,000 of the disallowed deductions are allocable to H
and $16,000 of the disallowed deductions are allocable
to W. W’s liability is limited to $4,160 (4/5 of
$5,200). * * *
In sum, section 6015(d)(3)(A) and (B) and the applicable
regulations require the amount of deductions from the erroneous
items attributed to an individual to be first allocated to that
individual to the extent of the income reported on the joint
return that would have been allocated to that individual had
he/she filed a separate return. Hopkins v. Commissioner, supra
at 82-86. The excess of the amount of the deduction from the
erroneous items attributed to an individual over his/her share of
income reported on the joint return may give rise to a tax
benefit on the joint return to that individual’s spouse by
offsetting the income reported on the joint return that the
spouse would have reported had he/she filed a separate return.
Id. Consequently, such excess is allocated to the individual’s
spouse to the extent it reduces the spouse’s share of income
reported on the joint return. Id.
The parties agree that, for purposes of section 6015(c) and
(d), items of income, loss/credit, and taxable income reported on
petitioners’ 1994 joint return should be allocated between
petitioner and Mr. Capehart as follows:
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