Associated Dentists of River Falls, f.k.a. River Falls Dental Associates, Ltd. - Page 9

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          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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