Wayne M. and Janet L. Johnson - Page 6

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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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