- 9 -
This Court entered a decision in Elwood's case on August 29,
1989.
OPINION
Issue 1. The NOL's for 1987 and 1988
Respondent disallowed $166,129 of petitioner's claimed 1987
NOL deduction,8 and the entire NOL claimed for 1988. More
specifically, respondent adjusted the 1983, 1984, 1985, and 1986
losses that made up the 1987 and 1988 NOL's. Respondent
eliminated the 1983 and 1985 NOL's on the ground that petitioner
did not elect to carry such losses forward. Petitioner has
conceded this adjustment.9 Respondent also disallowed the
carryforward of the 1984 loss, on the ground that such loss was
eliminated by the unreported gain arising from the sale of the
Grapevine property, as discussed below. Finally, respondent
reduced the 1986 loss by $10,842, alleging that petitioner had
8 Petitioner claimed a net operating loss deduction of $195,459
for 1987, and respondent allowed a net operating loss deduction
of $29,330.
9 Petitioner made no arguments regarding her failure to elect to
forgo the carrybacks in both 1983 and 1985, and her returns for
those years do not contain such an election. Since petitioner
failed to make such an election, as required by sec. 172(b)(3),
the 1983 and 1985 losses must first be carried back to 1980 and
1982, respectively. It appears that Elwood had sufficient income
in 1980 and 1982 to absorb the 1983 and 1985 carrybacks, and
petitioner has not argued otherwise. Therefore, we find that the
portion of petitioner's 1987 and 1988 net operating losses
arising from the 1983 and 1985 loss carryforwards is not
allowable. Rule 151(e)(4) and (5); Petzoldt v. Commissioner, 92
T.C. 661, 683 (1989); Money v. Commissioner, 89 T.C. 46, 48
(1987).
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