- 18 -
supra at 131; Lifschultz v. Commissioner, supra at 234; Tokarski
v. Commissioner, supra at 77. Because petitioners have not
proven that Hamalee incurred any unreported expenditures that
were deductible under section 162, and because the record
contains no reliable evidence upon which we could have otherwise
estimated the amounts of these expenditures, had we found them to
have been incurred, we hold that Hamalee is not entitled to any
additional deductions.
4. Net Operating Loss Carryback
Petitioners argue that Hamalee has an NOL in 1989, and that
the Lees may carry it back to the subject years. Petitioners
allege that the NOL stems from: (1) The thefts mentioned above
and (2) cash expenditures made by Hamalee in 1989, but for which
it did not claim a deduction on its 1989 tax return. The cash
expenditures are generally asserted to be of the same type as the
cash expenditures mentioned above.
Petitioners must prove their right to deduct an NOL in the
subject years. United States v. Olympic Radio & Television,
Inc., 349 U.S. 232, 235 (1955). Such a deduction is a matter of
legislative grace; it is not a matter of right. Id. at 235;
Deputy v du Pont, 308 U.S. 488, 493 (1940).
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