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entitled to the claimed deduction. See Rule 142(a); New Colonial
Ice Co. v. Helvering, 292 U.S. 435, 440 (1934).
At the outset, we have determined that we do not have
jurisdiction with respect to the adjustments made to petitioners'
1993 Federal income tax return. Respondent did not determine a
deficiency in tax for petitioners' 1993 tax year and did not
issue a statutory notice of deficiency to petitioners for the
1993 tax year. See secs. 6212, 6213, 7442; Rules 13, 20; Monge
v. Commissioner, 93 T.C. 22, 27 (1989); Normac, Inc. v.
Commissioner, 90 T.C. 142, 147 (1988). However, we shall
consider the adjustments to the 1993 tax year to the extent they
affect the deficiency for the 1994 tax year.
1. Loss Deduction
We note that the parties’ arguments as to the deductibility
of the alleged losses are based on the assumption that all the
losses are related to petitioner's partnership interests. As the
entities involved also include subchapter C corporations, we
shall discuss the applicable law and analysis as applied to these
entities separately.
A. Partnership Losses
Petitioners claimed a partnership loss in the amount of
$3,376,497 for the 1992 taxable year. Petitioners claimed a
partnership loss carryover in the amount of $3,331,997 for the
1993 taxable year, and a partnership loss carryover in the amount
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