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however, are merely statements by petitioner and are not
corroborating evidence. With no evidence of a net operating loss
in 1994, we hold that petitioner is not entitled to a deduction
for a net operating loss carryover in any of the years in issue.
We also note that nothing in the record indicates petitioner
either carried back the loss to prior taxable years or elected to
waive the carryback, as required under section 172.
The third issue for decision is whether, and if so to what
extent, petitioner must include in income a State income tax
refund he received. Petitioner did not include in income any
State tax refund in 1997. Respondent determined that petitioner
received an unreported State income tax refund in that year in
the amount of $2,073.
Under the judicially created tax benefit doctrine, a
taxpayer generally must include in income the recovery or refund
of an amount deducted in a prior year. See Hillsboro Natl. Bank
v. Commissioner, 460 U.S. 370 (1983). However, a taxpayer is not
required to include in income such recovery or refund to the
extent that it did not provide the taxpayer with a tax benefit in
the prior year. See id.; sec. 111(a).
Petitioner claimed an itemized deduction for State and local
income taxes in the amount of $1,116 in 1996. Petitioner must
include in gross income in 1997 the State income tax refund
received in that year to the extent he received a tax benefit
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