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On audit of petitioners' 1990 joint Federal income tax
return as originally filed with respondent, respondent made no
adjustments to petitioners’ return. Thereafter, on April 15,
1994, petitioners filed with respondent an amended 1990 joint
Federal income tax return on which petitioners claimed a refund
of $5,597, based upon a $51,643 claimed capital loss relating to
purported worthless loans made to Telim and an additional $22,000
claimed section 1244 ordinary loss relating to petitioners’
shares of stock in Telim. On March 26, 1996, respondent
disallowed petitioners’ claim for refund for 1990.
On audit of petitioners’ 1991 joint Federal income tax
return, respondent, among other things, determined that, due to
petitioners’ failure to purchase their replacement residence
within the 2-year rollover period, petitioners were taxable on
the $26,713 gain realized on sale of their personal residence in
California.
In their petition filed herein with regard to 1991 and at
trial, petitioners argue that of the $51,643 capital loss claimed
on petitioners’ amended 1990 joint Federal income tax return,
$3,000 was claimed as a loss on the amended 1990 return and the
remaining $48,643 should be available as a capital loss carryover
to 1991 and should offset the $26,713 capital gain recognized on
sale of petitioners' residence.
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