Chong-Kak and Sang-Ok Lee - Page 18

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          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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