- 11 -
eliminate Elwood's claimed loss for that year. Accordingly,
petitioner would not be entitled to claim the 1984 NOL
carryforward as part of her 1987 and 1988 NOL deductions.
Petitioner argues that Elwood did not have unreported gain on the
1984 sale of the Grapevine property, so the loss reported in
1984, which was carried forward to 1987 and 1988, was allowable.
Gross income includes gains derived from dealings in
property. Sec. 61(a)(3). Gain derived from the disposition of
property is the excess of the amount realized over the property's
adjusted basis. Sec. 1001(a). The basis of property acquired
from a decedent is generally the fair market value of the
property as of the date of the decedent's death. Sec. 1014(a).
This basis rule parallels the general rule of the estate tax for
determining the value of property which is included in a
decedent's gross estate under section 2031. Sec. 1.1014-1(a),
Income Tax Regs.
The parties agree that Elwood realized $619,425 on the sale
of the Grapevine property, but disagree on Elwood's basis.
Respondent argues that Elwood was bound by a duty of consistency
to use a basis of $355,000 when he sold the Grapevine property.11
The $355,000 amount is one-fourth of $1,420,000, the stipulated
value in the Estate case. In the alternative, respondent argues
11 Respondent has conceded that she has the burden of proof on
this issue, because the duty of consistency is an affirmative
defense. Rule 142(a).
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