Lee G. Gale - Page 41




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          Petitioner’s 1990 and 1991 individual returns do not, by                    
          themselves, adequately substantiate the 1990 and 1991 NOLs.                 
          Petitioner’s explanations for the lack of any further                       
          substantiation are contradictory and incredible.  We hold,                  
          therefore, that petitioner did not meet his burden of proof                 
          regarding the 1990 and 1991 NOL carryovers to 1992 and 1994.  See           
          McWilliams v. Commissioner, T.C. Memo. 1995-454.                            
               Even if petitioner had provided the requested documentation,           
          he did not elect to relinquish the NOL carrybacks from 1990,                
          1991, and 1992.  Under the general rule, the 1990 NOL first                 
          should have been carried back to 1987, 1988, and 1989 before                
          being carried forward to 1991.  Sec. 172(b)(1) and (2).                     
          Similarly, the 1991 NOL should have been carried back to 1988,              
          1989, and 1990, and the 1992 NOL should have been carried back to           
          1989, 1990, and 1991.  Petitioner stated on the record that no              
          elections under section 172(b)(3) were filed for any of the                 
          affected years.  In addition, there is nothing in the record that           
          provides any basis from which we could determine the amounts of             
          the 1990, 1991, and 1992 NOLs that were absorbed in the years               
          before 1990, the earliest year for which a tax return was                   
          included in the record.  Accordingly, petitioner has not shown              
          that he is entitled to deductions under section 172 for taxable             
          years 1992 and 1994.  See Welch v. Commissioner, T.C. Memo. 1998-           
          121, affd. 204 F.3d 1228 (9th Cir. 2000).                                   






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