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erroneous items remains allocated to her, not the $11,044 that
petitioner’s theory would allocate to her.
ii. Benefit of Lower Tax Rate
Petitioner posits that the proportionate allocation method
provided in section 1.6015-3(d)(4)(i)(A), Income Tax Regs., is
invalid because it does not account for the difference in the tax
rates as applied to petitioner’s and Mr. Capehart’s separate
taxable incomes. Petitioner contends that Mr. Capehart would
have owed tax of $8,723 had he filed a separate return: $19,000
of taxable income taxed at the rate of 15 percent and $18,677 of
taxable income taxed at the rate of 28 percent.4 Petitioner
asserts that her erroneous items provided a tax benefit on the
1994 joint return to Mr. Capehart because Mr. Capehart’s $37,967
of taxable income would have been taxable at an effective rate of
21.5 percent, rather than 15 percent. Petitioner has not
provided a computation of the portion of her erroneous items that
provided the asserted benefit to Mr. Capehart. Furthermore,
petitioner’s erroneous items did not reduce Mr. Capehart’s
effective tax rate.
Mr. Capehart’s $37,967 of taxable income was offset by
$21,282.50 of erroneous items attributed to him. The $16,684.50
4Petitioner’s computation is in error in that it attributes
$37,677 ($19,000 + $18,677) of taxable income to Mr. Capehart.
Mr. Capehart had $37,967 of taxable income. Consequently,
$18,967 of his income would be taxable at the rate of 28 percent.
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