- 15 - 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 ofPage: Previous 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Next
Last modified: May 25, 2011