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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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