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respondent disagrees with each of petitioners' arguments. We agree
with respondent.
First, we do not agree that taxing the capital gain realized
on the sale of petitioners' Mequon residence is a violation of
petitioners' equal protection rights. The Fifth Amendment to the
Constitution protects against the deprivation of life, liberty, or
property without due process of law. The Due Process Clause of the
Fifth Amendment provides protection against Federal discriminatory
action "so unjustified as to be violative of due process". Shapiro
v. Thompson, 394 U.S. 618, 642 (1969); Bolling v. Sharpe, 347 U.S.
497-499 (1954); Ward v. Commissioner, 608 F.2d 599 (5th Cir. 1979),
affg. per curiam T.C. Memo. 1979-39. Further, the Due Process
Clause of the 5th Amendment has been held to incorporate the Equal
4(...continued)
Process Clause of the 5th Amendment, because
it transforms a real loss into a fictitious
gain and creates phantom income or distorts
income beyond any reasonable proportions.
IRS wrongfully fails to recognize the
phenomenon of inflation, as explained more
fully below.
c. The house "gain" taxing scheme
violates the Equal Protection component of
the 5th Amendment for an additional reason,
namely because IRS refuses to recognize
either nominal or real losses on the sale of
a residence, even though it readily taxes
nominal gains. That results in disparate
treatment as between homeowners who cannot
deduct losses and businesses which can
because businesses can deduct those losses.
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