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Furthermore, a tax return is merely a statement of the taxpayer's claim and
does not establish the truth of the matters set forth therein. Wilkinson v.
Commissioner, 71 T.C. 633 (1979).
Respondent argues that petitioner has not substantiated the amounts nor
established that such carryforwards would not have been absorbed in prior
years. Petitioner asserts that TFC operated at a loss in 1985 as shown on
TFC's tax return. Furthermore, petitioner made an election to forgo the
carryback on his 1985 individual income tax return.
Petitioner has provided us with nothing more than his individual tax
returns and the corporate tax returns of TFC as proof for the net operating
loss. Petitioner has not provided us with TFC's books and records, or any
other means to substantiate the amount of the loss claimed. We sustain
respondent's disallowance of the net operating loss deduction.
Credits are a matter of legislative grace, and petitioners have the
buren of proving that they are entitled to the credit. Interstate Transit
Lines v. Commissioner, 319 U.S. 590, 593 (1943); Segel v. Commissioner, 89
T.C. 816, 842 (1987). Taxpayers cannot merely rely on prior years' tax
returns in which credits were claimed. Sherwood v. Commissioner, T.C. Memo.
1988-544. Section 38 provides for a credit against tax for the purchase of
qualified property. To the extent such credit was not used in the tax year,
it may be carried back 3 years or forward 15 years. Sec. 39. A credit
carried forward to a tax year beginning after June 30, 1987, must be reduced
by 35 percent. Sec. 49(c).
Respondent argues that petitioner has not substantiated the amounts nor
established that such carryforwards would not have been absorbed in prior
years. Petitioner further asserts that an investment tax credit flowed
through from TSI's 1984 tax return to petitioner and may be offset against
petitioner's tax liabilities for the years in issue.
Petitioner did not provide any invoices to support the purchase of
qualified property upon which a credit could have been claimed. He did not
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