- 5 - Petitioners then fully deducted these losses on line 18 of their returns (Forms 1040) for each of the years in question. Only the portion of the losses attributable to petitioner's condominium unit remains in issue. Upon examination, respondent disallowed the claimed losses, reasoning that petitioner's ownership of the condominium unit constituted a passive activity for purposes of section 469, thereby precluding petitioners from offsetting losses attributable to the unit against nonpassive income. Discussion We begin by noting that petitioners bear the burden of proving that respondent's determination is erroneous. Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). This burden remains when a case is fully stipulated. Borchers v. Commissioner, 95 T.C. 82, 90-91 (1990), affd. 943 F.2d 22 (8th Cir. 1991). Moreover, deductions are a matter of legislative grace, and petitioners bear the burden of proving that they are entitled to any of the deductions claimed. INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992). Section 162 permits deductions for all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on a trade or business. Section 212 permits deductions 3(...continued) returns are attributable to the condominium unit in question in addition to property owned by petitioners in Cloudcroft, New Mexico. Since there is no allocation on the returns, or elsewhere in the record, we have included the entire amounts.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 Next
Last modified: May 25, 2011