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issuing State and the ability of the holder to limit competition
by exercising its right to intervene in the application process.
The FAAAA eliminated the holders' right to intervene and oppose
applications for new operating authorities.
The parties agree that one effect of the FAAAA was to render
worthless petitioner's pre-1995 operating authorities, which
resulted in petitioner's sustaining an ordinary loss of $520,677.
Discussion
The only issue in this case is whether petitioner sustained
the loss from the worthlessness of its pre-1995 intrastate
operating authorities during 1994 or during 1995. Petitioner
asserts that the operating authorities became worthless during
1994. Respondent determined that petitioner sustained the loss
during 1995.
Section 165(a) allows a deduction for any loss sustained
during the taxable year and not compensated for by insurance or
otherwise. To be allowable as a deduction under section 165(a),
a loss must be evidenced by closed and completed transactions,
fixed by identifiable events, and actually sustained during the
taxable year. Substance and not mere form shall govern in
determining a deductible loss. See Cottage Sav. Association v.
Commissioner, 499 U.S. 554, 567-568 (1991); Boehm v.
Commissioner, 326 U.S. 287, 292 (1945); sec. 1.165-1(b), (d)(1),
Income Tax Regs.
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Last modified: May 25, 2011