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nominally held between the spouses but also to each spouse’s
level of participation in the activity which gave rise to the
erroneous item.
Joint ownership, by itself, is not determinative of whether
the erroneous item is attributable to one or both spouses. See
Rowe v. Commissioner, T.C. Memo. 2001-325; Buchine v.
Commissioner, T.C. Memo. 1992-36, affd. 20 F.3d 173 (5th Cir.
1994). A key factor is whether and to what extent the electing
spouse voluntarily participated in the investment which gave rise
to the erroneous item.
Generally, an electing spouse who voluntarily agrees to
enter into an investment and who actively participates in it is
precluded from attributing the entire investment to the
nonelecting spouse. See Abelein v. Commissioner, T.C. Memo.
2004-274; Capehart v. Commissioner, T.C. Memo. 2004-268, affd.
204 Fed. Appx. 618 (9th Cir. 2006); Bartak v. Commissioner, T.C.
Memo. 2004-83, affd. 158 Fed. Appx. 43 (9th Cir. 2005); Ellison
v. Commissioner, T.C. Memo. 2004-57; Doyel v. Commissioner, T.C.
Memo. 2004-35.
However, if the electing spouse is not an active
participant, the electing spouse may qualify for relief even
though being named as a shareholder or partner. See McKnight v.
Commissioner, T.C. Memo. 2006-155 (in the context of section
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