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Petitioners reported zero taxable income on their income tax
return for 1992, and they paid no income tax for that year.
In the notice of deficiency, respondent determined that
petitioner's transaction with Mr. Suiter "closed" in 1990 and
that the $30,000 loss was therefore not deductible in 1992.
In their petition, petitioners alleged that they were
entitled to deduct a $30,000 loss in 1992. Petitioners also
alleged that "The additional $25,000 was not included but is
alleged as an additional loss in 1992 for abandonment" and that
"an additional abandonment loss in the amount of $25,000 has also
occurred in 1992 resulting in a refund and carryback and
carryforward loss."3
OPINION
As a general rule, the Commissioner's determinations are
presumed correct, and the taxpayer bears the burden of proving
that those determinations are erroneous. Rule 142(a); INDOPCO,
Inc. v. Commissioner, 503 U.S. 79, 84 (1992); Welch v. Helvering,
290 U.S. 111, 115 (1933).
Section 165(a) permits a taxpayer to deduct "any loss
sustained during the taxable year and not compensated for by
insurance or otherwise." Only a loss "sustained during the
taxable year" may be deducted under section 165(a). Petitioners
3 We find that the $25,000 loss was sufficiently alleged in
the petition to give respondent fair notice of the total amount
of loss claimed by petitioners in this case for the taxable year
in issue.
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