-23-
Accordingly, the adjustments respondent made in the notice of
deficiency increased (decreased) petitioners' income and loss items
as follows:
Income Short-Term Long-Term
Year (Loss) Capital Gain Capital Gain
1979 $1,763,918 ($153,437) ---
1980 68,323 860,854 ($1,414,760)
The adjustment to petitioners' 1979 income results in a reduction
of petitioners' net operating loss carryback to 1976 from
$1,766,137 to $146,279, and an increase of $1,619,858 in taxable
income for 1976. The disallowed deductions arose from Tandrill's
transactions involving Treasury bill option spreads and commodity
futures.17
OPINION
Issue 1. Tandrill Losses
The first issue for decision is whether respondent properly
disallowed petitioners’ allocable share of Tandrill’s 1979 and 1980
losses pursuant to section 165(c)(2). This issue turns on whether
the underlying partnership transactions were entered into primarily
for profit. Petitioners have the burden of proof in this regard.
Rule 142(a).
17 We note that prior to the trial in this case, the
Internal Revenue Service (IRS) audited Mr. Illingworth’s 1978-80
tax years, disallowing loss deductions that he had claimed
relating both to Tandrill’s transactions at issue herein and to
other transactions involving other partnerships. The IRS
determined that Tandrill’s transactions had not been entered into
for profit. Mr. Illingworth ultimately accepted an IRS
settlement offer based on this determination.
Page: Previous 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 NextLast modified: May 25, 2011