- 6 - the Internal Revenue Service Center in Fresno, California, on April 27, 1993. From 1987 through 1992, petitioners prepared their own tax returns. When they began using a paid preparer in 1993, they discontinued deducting the NOL. They also discontinued filing a Schedule C with their 1993 income tax return. Although petitioner called the Internal Revenue Service (IRS) to ask about the mechanics of calculating the NOL, he did not tell anyone at the IRS that the NOL he was planning to deduct involved lost anticipatory wages. OPINION Determinations made by the Commissioner in the notice of deficiency are generally presumed correct; the burden of proof is on the taxpayers to show those determinations are wrong. Rule 142(a); Welch v. Helvering, 290 U.S. 111 (1933). Net Operating Loss Deductions are a matter of legislative grace. New Colonial Ice Co. v. Helvering, 290 U.S. 435, 440 (1934). It is well established in case law that no deduction is allowed under section 165 or any other Code section for loss of potential income. See, e.g., Hort v. Commissioner, 313 U.S. 28, 33 (1941) (since unrealized rent is not includable in taxpayer's gross income, taxpayer has no grounds for deduction); Stephens v. Commissioner, T.C. Memo. 1980-131 (no deduction allowed for wages that could have been earned had an individual's employment notPage: Previous 1 2 3 4 5 6 7 8 9 10 11 Next
Last modified: May 25, 2011