- 10 -
received unreported income in that amount. Petitioner conceded
this adjustment.10
After conceding respondent's adjustments to the 1983, 1985,
and 1986 NOL carryforwards, petitioner asserts that the portion
of the 1987 and 1988 NOL's arising from the 1984 NOL carryforward
is allowable. Furthermore, petitioner asserts that she had
additional, unclaimed deductions during the period 1984 to 1988
which contribute to the NOL available in 1987 and 1988.
As a preliminary point, we note the well-settled rule that
the Commissioner may recompute a taxpayer's taxable income or
loss for a year in which the statute of limitations would
otherwise bar assessment in order to redetermine the amount of
the NOL deduction claimed in an open year. ABKCO Indus., Inc.
v. Commissioner, 56 T.C. 1083, 1089 (1971), affd. 482 F.2d 150
(3d Cir. 1973); State Farming Co. v. Commissioner, 40 T.C. 774,
783 (1963). Accordingly, in determining whether petitioner's
1987 and 1988 NOL's are allowable, respondent may recompute the
income or loss reported in the tax years which generated the
carryforwards claimed by petitioner in 1987 and 1988.
A. 1984 Gain From Sale of Grapevine Property
Respondent argues that Elwood had sufficient unreported gain
arising from the sale of the Grapevine property in 1984 to
10 The amount of unreported income conceded by petitioner
exceeds $10,842. However, since respondent has not argued for an
increase in the deficiency, we treat petitioner's concession as
being limited to $10,842.
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