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deduction was taken in a prior year. Petitioners also bear the
burden to prove that the losses have not been previously
absorbed. Williams v. Commissioner, T.C. Memo. 1991-317, affd.
without published opinion 996 F.2d 1230 (9th Cir. 1993). When a
deduction is carried forward from one year to the next, the
taxpayer must keep records to substantiate the amount that is
carried forward. Sec. 1.6001-1(e), Income Tax Regs.
In the instant case, petitioners cannot show conclusively
that the losses, if any, would not have been previously absorbed.
The pertinent transactions occurred as of October 31, 1979
(Riviera), and May 9, 1980 (Arizona Marine). Without access to
petitioners' Federal income tax returns or the relevant return
information for tax years 1979 and 1980, we find that it is
impossible to determine whether or not the losses were absorbed.
Based on the foregoing, we must conclude that petitioners
failed to carry their burden of proving that deductible losses
were suffered on the Riviera and Arizona Marine transactions.
Petitioners have not offered sufficient evidence to prove their
bases in the assets they received from those transactions.
Additionally, we find that they failed to carry their burden of
proving that any losses would not have been fully absorbed prior
to the year in question. With respect to these issues, we have
considered all arguments made by petitioners, and, to the extent
not addressed above, find them to be without merit.
To reflect the foregoing,
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