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In the notice of deficiency, respondent disallowed the loss
deduction resulting from the sale of the Stewart property because
petitioners did not establish that their basis in the property
exceeded the net proceeds from the sale. In the alternative,
respondent disallowed the loss deduction on the ground that the
loss was not from a transaction entered into for profit, to wit:
temporarily renting the Stewart property while it was available
for sale.
At trial, respondent introduced into evidence the
Residential Property Appraisal Record of the county assessor’s
office, which indicated the assessed value for tax purposes of
the Stewart property as follows:
Total
Assessment Year Real Estate Land Improvement
1992 $494,700 $122,400 $372,300
1993 1440,000 120,000 320,000
1994 through 1996 2400,000 80,000 320,000
1 The phrase “Prop 8” appears above the amount of $440,000.
See infra p. 12.
2 The phrase “Prop 8” appears above the amount of $400,000.
See infra p. 12.
Discussion
In general, the determinations of the Commissioner in a
notice of deficiency are presumed correct, and the burden is on
the taxpayer to show that the determinations are incorrect. Rule
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Last modified: May 25, 2011