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b. Petitioner’s Computation
i. Separate Return Liability
Petitioner asserts that her liability should be limited to
$2,134, the amount she would have paid on taxable income of
$14,204 had she filed a separate return. Petitioner’s theory
assumes that erroneous items cannot be allocated in a way that
would result in a spouse’s owing more tax than if separate
returns had been filed. Neither the statute nor the regulations
provide for such a limitation. The statute and the regulations
allocate all of petitioner’s erroneous items to her except for
those items that provided a tax benefit to Mr. Capehart on the
joint return. If petitioner’s liability were limited to $2,134,
then only $11,044 (not $14,204) of her erroneous items would be
allocated to her for purposes of section 6015(d)(1), computed as
follows:
deficiency allocated
X = to petitioner ($2,134) x total erroneous items($42,565)
deficiency ($8,225)
where X is the portion of the erroneous items allocable to
petitioner. Essentially, petitioner argues that Mr. Capehart
received a tax benefit on the joint return from $10,238.50 of
petitioner’s erroneous items.
Under petitioner’s theory, Mr. Capehart’s $37,967 taxable
income would have been offset by his erroneous items ($21,282.50)
plus $10,238.50 of petitioner’s erroneous items. The $9,606 of
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