Linda M. Sherbo v. Commissioner of Internal Revenue

LOKEN, Circuit Judge.

When two taxpayers claim a tax benefit to which only one is entitled, the Internal Revenue Service may issue “whipsaw” deficiency notices denying the benefit to both until the rightful claimant can be determined. In this case, on their 1995 and 1996 federal income tax returns, Linda M. Sherbo and her ex-husband, Steve, claimed conflicting earned income credits based upon their children. The IRS issued deficiency notices to both taxpayers. Linda commenced this action in the Tax Court to contest her deficiency. After Steve defaulted, the IRS conceded that Linda owed no…