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Issue 2. Net Operating Losses
Petitioners claimed carryforward losses from 1976, 1977,
1980, 1982, 1984, 1985, and 1987 to the taxable years in issue.
More specifically, petitioners claimed a net operating loss
("NOL") carryforward in the amount of $45,207 on page 1 of their
Form 1040 for 1990. Through amended returns, petitioners claimed
carryforward losses for 1988 and 1989.
As mentioned above, the Commissioner's determinations are
presumed correct, and the taxpayer bears the burden of proving
that those determinations are erroneous. Rule 142(a); Welch v.
Helvering, 290 U.S. 111, 115 (1933). Accordingly, our first
inquiry must be whether petitioners had any net operating losses
in taxable years prior to 1988 that they could carry forward to
the taxable years in issue, 1988, 1989, and 1990. Myers v.
Commissioner, T.C. Memo. 1995-329. Regarding this matter, the
record contains joint exhibits consisting of the income tax
returns filed by petitioners for each of the taxable years 1975
through 1990. The record also contains exhibits from petitioners
showing the NOL schedule compiled by petitioners' tax preparer.
However, no one testified as to the claimed net operating losses
incurred in the years prior to 1988, and the record includes no
proof that such losses were in fact incurred or that carryovers
were available as deductions in any of the years in issue.
Based on the inadequate record thus presented, we are unable
to find that any net operating losses actually were incurred in
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