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of foreclosure on October 5, 1990. The bank sold the property on
October 31, 1990.
Petitioner thereafter abandoned his construction business.
He began flying on a full-time schedule and has since been
promoted from co-pilot to international co-pilot to captain.
Petitioner claimed a Schedule C business loss resulting from
his construction activity in the amount of $25,621 on his 1990
return. In the statutory notice of deficiency, respondent
recharacterized petitioner's claimed ordinary loss as a long-term
capital loss. In so determining, respondent limited petitioner's
1990 loss deduction to $1,500, but allowed the excess loss in the
amount of $24,121 as a long-term capital loss carryover.3
Respondent's determinations in the statutory notice of
deficiency are presumed to be correct, and petitioner bears the
burden of proving otherwise. Rule 142(a); Welch v. Helvering,
290 U.S. 111, 115 (1933).
Section 165(a) provides that there shall be allowed as a
deduction any loss sustained during the taxable year and not
compensated for by insurance or otherwise. Losses from the sales
or exchanges of capital assets are allowed only to the extent
allowed in sections 1211 and 1212. Sec. 165(f).
3 In allowing the loss, we find that respondent has
conceded that the amount of the claimed loss is correct. We
therefore only address the issue of the characterization of the
claimed loss.
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