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that the amount of the deduction or loss they are claiming is
based on the value of Mr. Tonn’s labor. Courts have consistently
and uniformly held that a taxpayer has no basis in his labor.
See Carter v. Commissioner, 784 F.2d 1006, 1009 (9th Cir. 1986);
Funk v. Commissioner, 687 F.2d 264, 265 (8th Cir. 1982), affg.
per curiam T.C. Memo. 1981-506; Abrams v. Commissioner, 82 T.C.
403, 407 (1984); Rowlee v. Commissioner, 80 T.C. 1111, 1119-1122
(1983).
Petitioners are claiming a loss of $920,000. Petitioners do
not dispute that this amount was determined in the appraisal by
Russell Associates, in which the amount is attributed to the
value of Mr. Tonn’s labor. Petitioners have not alleged that
they reported in their gross income the amount due from
Laurington under the installment sale of the on-farm energy
equipment or any amount attributable to Mr. Tonn’s labor
contribution to the on-farm energy equipment. Petitioners have
represented that they were cash method taxpayers for the years in
issue. Accordingly, the undisputed facts establish, as a matter
of law, that petitioners are not entitled to a deduction or a
loss for the years in issue.
An appropriate order will be
issued granting respondent’s motion
for partial summary judgment.
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