Robert G. Leslie and Marilyn B. Leslie - Page 35

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          1.165-13T, Q&A-3, Temporary Income Tax Regs., supra, specifically           
          states that "the taxpayer is allowed to offset the gain in the              
          subsequent taxable year by the amount of loss (including                    
          expenses) disallowed in year 1."  Thus, the plain language of the           
          regulations is clear that a taxpayer can offset gain in a                   
          subsequent year but does not state the taxpayer is entitled to a            
          net loss deduction.                                                         
               Petitioners also incorrectly contend that the Court's                  
          reliance in Nolte v. Commissioner, supra, on section 1.165-13T,             
          Q&A-3, Temporary Income Tax Regs., supra, is unfounded; they                
          argue that the regulation is invalid to the extent it reaches a             
          result different from the congressional mandate of DEFRA section            
          108(c).  The Court in Nolte found that Congress designed DEFRA              
          section 108(c) as a relief provision so that the Commissioner               
          could not obtain a windfall by denying straddle losses and then             
          having taxpayers recognize straddle gains resulting from the                
          closing of a straddle.  Nolte v. Commissioner, supra.  Section              
          1.165-13T, Q&A-3, Temporary Income Tax Regs., supra, carries out            
          Congress' mandate to allow straddle losses but only to the extent           
          of, and against, straddle gains.                                            
               Therefore, we find that DEFRA section 108(c) and section               
          1.165-13T, Q&A-3, Temporary Income Tax Regs., supra, make it                
          clear that petitioners are only entitled to offset their gains by           
          the amount of the losses.  Nolte v. Commissioner, supra; see also           
          Ewing v. Commissioner, 91 T.C. at 421.  Accordingly, petitioners            




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