I've researched the question I asked in #11 and my findings are somewhat surprising.
The following encapsulates the issue and is from Petrie v. Commissioner (70 T.C.M. 1566):
The third issue for decision is whether petitioner had additional rental income and is entitled to claim additional rental expenses for 1991. Petitioner contends he should be permitted to exclude the rental income on his 1991 return and is entitled to claim the rental expenses because the Temporary Orders mandated such treatment. Respondent contends that petitioner must report his share of the income and expenses.
Income with respect to joint tenancy property is allocated and taxed in proportion to that which each co-owner is entitled to receive under local law. Parsons v. Commissioner [Dec. 27,196], 43 T.C. 378 (1964). A co-tenancy under Colorado law provides that each of two joint tenants owns an undivided one-half interest in the property as a whole. Commercial Factors v. Clarke & Waggener, 684 P.2d 261 (Colo. Ct. App. 1984).
However, co-owners are entitled to a deduction for mortgage interest and real estate taxes paid on jointly-owned property to the extent that they have actually paid these amounts and provided that no other tenant has previously claimed a deduction therefor. Blackburn v. Commissioner [Dec. 36,178(M)], T.C. Memo. 1979-266, affd. [82-2 USTC ¶ 9444] 681 F.2d 461 (6th Cir. 1982); Finney v. Commissioner [Dec. 34,074(M)], T.C. Memo. 1976-329. The reason for treating interest and taxes differently from other types of expenses and losses is that even though a co-owner may not be personally liable for the entire amount of the interest and taxes, payment may be necessary to preserve that co-owner's rights in the entire property. Powell v. Commissioner [Dec. 28,348(M)], T.C. Memo. 1967-32.
There is a footnote in the case indicating that of the seven categories of expense the petitioner had originally claimed, five were allowed only according to his 50% ownership interest: auto and travel, cleaning and maintenance, insurance, repairs, and depreciation.
I was surprised that auto and travel would need to be split even though it didn't relate directly to the jointly owned property, but I found the rationale in Boyd v. Commissioner:
Obviously the phrase "ordinary and necessary expenses," as used in section 23 (a) (2), is to have the same meaning as has been given to the same phrase in section 23 (a) (1). Trust of Bingham v. Commissioner, 325 U.S. 365. Under either section the permitted deduction is for expenses and the expenses must be both ordinary and necessary. There might be doubt that the expense, in excess of one-half, when paid by the owner of a one-half interest would be "ordinary" — on the theory that it is like paying the obligation of another.
The Code references are to the statutes that predated § 162 and § 212.
The general theory here is that any expense incurred to produce income is only deductible by a taxpayer to the same extent that she is entitled to the enjoyment of that income. The remaining portion of the expense generates a proportional right of reimbursement from the other beneficial owners of that income.
The reason that
mortgage interest and real estate taxes are fully deductible is that they aren't paid to produce income but rather to secure a continued right of enjoyment of a property. To answer my own question, then, expenses such as travel and tax prep fees don't "attach" to anyone based on who pays them - they "attach" to the reason that the
deduction is allowed in the first place. Because tax prep fees are with reference to the individual tax liability of a taxpayer, they are fully deductible by that taxpayer - not so for travel expenses.
The right of reimbursement and proportionate allocation of expenses strongly evoke partnership tax concepts. Unless the agreement specifically denies the right of reimbursement to a partner, no UTP's are allowed on a return. I suppose that the partnership may deduct such expenses regardless of whether it has reimbursed the funds or not? Also, income and deductions in a partnership must be allocated according to ownership interest, unless there is a specific arrangement otherwise - but even then the expenses may be reallocated under § 704(b) if there is no "substantial economic effect". I suppose this statute contemplates a case when the primary motive is tax avoidance.
A final note -
Boyd also mentions that "the important distinction between mere coowners and coowners who are engaged in a partnership lies in the degree of business activity of the coowners or their agents". More business activity implies a situation where a partner may be compensated in respect of the actual work he does in addition to his capital contribution, which would seem to justify the right of partners to allocate income and expenses where "mere coowners", compensated only for capital interest, could not.