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taxable income reported on the return would have consisted of
$3,160 ($14,204 - $11,044) of petitioner’s taxable income and
$6,446 of Mr. Capehart’s taxable income.
Petitioner’s theory is flawed. Had petitioner and Mr.
Capehart filed separate returns that included the erroneous
items, petitioner would have reported no taxable income because
$14,204 of her $21,282.50 erroneous items would have offset all
of her income, and $7,078.50 of her erroneous items would have
been unused in 1994. Consequently, she received the tax benefit
of $14,204 of her erroneous items. Moreover, Mr. Capehart would
have reported taxable income of $16,684.50, the excess of his
taxable income over his erroneous items ($37,967 - $21,282.50).
Consequently, if petitioner and Mr. Capehart had filed separate
returns, on a pro forma basis their combined taxable income would
be $16,684.50 that would be solely attributable to Mr. Capehart.
Since petitioner and Mr. Capehart reported $9,606 of taxable
income on their joint return for 1994, Mr. Capehart’s share of
the taxable income was offset by $7,078.50 ($16,684.50 - $9,606)
of petitioner’s erroneous items that were reported on the joint
return. Therefore, $7,078.50, not $10,238.50, of petitioner’s
erroneous items gave rise to a tax benefit on the 1994 joint
return to Mr. Capehart. Consequently, only $7,078.50, not
$10,238.50, of petitioner’s erroneous items is allocated to Mr.
Capehart under section 6015(d)(3), and $14,204 of petitioner’s
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