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Equitable Estoppel
Mr. Gordon argues that respondent is equitably estopped from
claiming that petitioners are not entitled to the claimed 1988
NOL deduction because his 1986 net trading loss constitutes a
capital, and not an ordinary, loss. To support his argument, Mr.
Gordon contends that (1) the IRS initiated an examination of the
Gordons’ 1986 return in August 1987; (2) the revenue agent
conducting that examination orally informed Mr. Gordon in October
1988 that that loss was properly characterized as an ordinary
loss; (3) the IRS issued a no-change letter to the Gordons in May
1989 that formally notified them that the examination of their
1986 return showed that "no change" was necessary in the tax
reported in that return; and (4) he arranged his affairs to his
detriment in reliance on that oral statement and that no-change
letter. Respondent contends that Mr. Gordon has not established
the elements necessary to warrant application of the doctrine of
equitable estoppel. We agree with respondent.
"Equitable estoppel is a judicial doctrine that 'precludes a
party from denying his own acts or representations which induced
another to act to his detriment.'" Hofstetter v. Commissioner,
98 T.C. 695, 700 (1992) (quoting Graff v. Commissioner, 74 T.C.
743, 761 (1980), affd. 673 F.2d 784 (5th Cir. 1982)). That
doctrine is applied against respondent "'with the utmost caution
and restraint.'" Boulez v. Commissioner, 76 T.C. 209, 214-215
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