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through 1981, and respondent never audited petitioners' joint
Federal income tax returns for 1982 through 1988, even though the
carryforward deductions claimed on the amended 1978 through 1981
and 1982 through 1988 income tax returns were based on the same
$1,517,999 1975-NOL that was the basis for the NOL carryforward
deductions that were apparently claimed by the bankruptcy trustee
on Federal income tax returns filed on behalf of petitioner's
bankruptcy estate for 1976 through 1980.
In 1993, respondent audited only petitioners' 1989, 1990,
and 1991 joint Federal income tax returns, and on September 30,
1993, respondent issued a notice of deficiency disallowing the
carryforward deductions of $104,700, $98,604, and $30,848,
respectively, claimed on those three returns with regard to the
1975-NOL. Respondent's disallowance of the claimed 1975-NOL
carryforward deductions was based on the argument that, under
section 172 as applicable to 1975, the period for carrying
forward the 1975-NOL expired on December 31, 1980. Respondent
also disallowed the $7,414 in car and truck expenses claimed on
petitioners’ 1989 joint Federal income tax return and determined
the accuracy-related penalties.
OPINION
Deductions are a matter of legislative grace with respect to
which taxpayers generally bear the burden of proof. Rule 142(a);
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