- 14 -
year 1991 that ultimately results in a net operating loss
carryover deduction for the year 1992; respondent disagrees on
virtually every point. Neither party makes a distinction between
the portion of the $475,000 in unpaid advances represented by
notes and the remaining portion.4
But for the advances evidenced by the notes, there is
little, if any, evidence in the record regarding the details of
any other transaction(s) that account for the $155,000 difference
between the face value of the notes and the stipulated amount of
the unpaid advances. As we have often stated, deductions are a
matter of legislative grace. A taxpayer who claims a deduction
must identify the specific statute that allows for the deduction
and demonstrate that all of the requirements of the statute have
been satisfied. Rule 142(a); INDOPCO, Inc. v. Commissioner, 503
U.S. 79, 84 (1992); New Colonial Ice Co. v. Helvering, 292 U.S.
435, 440 (1934). Having provided the Court with virtually no
information regarding $155,000 of the amount here in dispute,
petitioners have failed to establish that the requirements of
section 166 have been satisfied with respect to that amount. On
4The parties stipulated that as of Nov. 1, 1991, "the
petitioner had unpaid advances to the corporation totaling
$475,000". The preamble to the stipulation states that
respondent "does not stipulate and agree by the use of the terms
'note,' 'loan,' or 'advance' in this stipulation or annexed
exhibits that amounts paid to or on behalf of * * * [BCBI] by
petitioner * * * constituted loans for federal income tax
purposes."
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