PUBLIC LAW 105-206-^JULY 22, 1998 112 STAT. 737 purpose of the transfer was the avoidance of tax or pa3naientoftax. "(ii) PRESUMPTION. — "(I) IN GENERAL. —For purposes of clause (i), except as provided in subclause (II), any transfer which is made after the date which is 1 year before the date on which the first letter of proposed deficiency which allows the taxpayer an opportunity for administrative review in the Internal Revenue Service Office of Appeals is sent shall be presumed to have as its principal purpose the avoidance of tax or payment of tax. " (II) EXCEPTIONS. —Subclause (I) shall not apply to any transfer pursuant to a decree of divorce or separate maintenance or a written instrument incident to such a decree or to emy transfer which an individual establishes did not have as its principal purpose the avoidance of tax or payment of tax. "(d) ALLOCATION OF DEFICIENCY. —For purposes of subsection (c)— "(1) IN GENERAL. —The portion of any deficiency on a joint return allocated to an individual shall be the amount which bears the seune ratio to such deficiency as the net amount of items taken into account in computing the deficiency and allocable to the individual under paragraph (3) bears to the net amount of all items taken into account in computing the deficiency. "(2) SEPARATE TREATMENT OF CERTAIN ITEMS.—If a deficiency (or portion thereof) is attributable to— " (A) the disallowance of a credit; or "(B) any tax (other than tax imposed by section 1 or 55) required to be included with the joint return; and such item is allocated to one individual under paragraph (3), such deficiency (or portion) shall be allocated to such individual. Any such item shall not be taken into account under paragraph (1). "(3) ALLOCATION OF ITEMS GIVING RISE TO THE DEFI- CIENCY. —For purposes of this subsection— "(A) IN GENERAL. — Except as provided in paragraphs (4) and (5), any item giving rise to a deficiency on a joint return shall be allocated to individuals filing the return in the same manner as it would have been allocated if the individuals had filed separate returns for the taxable year. "(B) EXCEPTION WHERE OTHER SPOUSE BENEFITS. — Regulations. Under rules prescribed by the Secretary, an item otherwise allocable to an individual under subparagraph (A) shall be allocated to the other individual filing the joint return to the extent the item gave rise to a tax benefit on the joint return to the other individual. "(C) EXCEPTION FOR FRAUD. —The Secretary may provide for an allocation of any item in a manner not prescribed by subparagraph (A) if the Secretary establishes that such allocation is appropriate due to fraud of one or both individuals.
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