- 9 -
value. Accordingly, the rate charged Dr. Nelson was not the
measure of fair rental value.
As to the remaining issue, i.e., the deductibility of the
NOL, section 172 allows a taxpayer to deduct an NOL equal to the
sum of NOL carryovers plus NOL carrybacks to that year. Sec.
172(a). Petitioner, as the claimant of an NOL, must prove its
right thereto. United States v. Olympic Radio & Television,
Inc., 349 U.S. 232, 235 (1955). A deduction for an NOL is not a
matter of right; it is a matter of legislative grace. Id.;
Deputy v. duPont, 308 U.S. 488, 493 (1940).
The record does not show that petitioner incurred an NOL in
1992, or that any portion of this NOL, if in fact one was
sustained, was properly applied in 1993. Petitioner must prove
not only that it had an NOL in 1992, but that a portion of an NOL
was properly deductible in 1993. See Jones v. Commissioner,
25 T.C. 1100, 1104 (1956), revd. and remanded on other grounds
259 F.2d 300 (5th Cir. 1958); Vaughan v. Commissioner, 15 B.T.A.
596 (1929); see also sec. 172(b)(1)(A), (2), and (3) (absent an
election to the contrary, an NOL for any taxable year must first
be carried back 3 years and then forward 15 years). Although
petitioner's 1993 tax return reports that petitioner incurred an
NOL in 1992, and that it carried back a portion of this loss to
1989, these representations are not enough for petitioner to meet
its burden. See Jones v. Commissioner, supra at 1104. We hold
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