- 13 - 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 benefitPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Next
Last modified: May 25, 2011