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March 1994 through December 1995. The automobile’s annual lease
value was $7,750 in 1994 and 1995.6
Deborah also used the automobile for business purposes such
as collecting receivables, and other employees used the
automobile during working hours to deliver small quantities of
produce. Neither Cox Tomato nor any petitioner shareholder,
however, kept a mileage log or any other documentation to
substantiate the automobile’s business use during the years at
issue.
IV. Notices of Deficiency
In the notices of deficiency, respondent determined that in
1994 petitioner shareholders did not have sufficient bases in
Cox Tomato to claim the losses reported. Respondent determined
that Christopher and Gregory had no bases in Cox Tomato.
Respondent determined that Deborah had a basis of $2,791 in Cox
Tomato, allowed Deborah to recognize a flowthrough loss in 1994
to the extent of that basis, and disallowed the $12,000 loss she
claimed in 1995 because respondent determined that she had no
remaining basis. Respondent disallowed each of petitioner
shareholders’ NOL carrybacks for all the years in issue.
Respondent further determined that Deborah must include the
6Deborah has conceded that the distributions received during
1994 and 1995 are includable in her income as determined by
respondent.
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