- 10 -
Respondent computed an NOL of $391,243 for 1992, which he allowed
as carryback and carryforward deductions for petitioners’ 1989,
1990, 1991, 1993, 1994, 1995, and 1996 taxable years. After
accounting for the adjustments to the NOL carryforward deductions
and the depreciation deduction for 1996, as well as other items,
respondent determined deficiencies of $3,221 for 1996 and $94,904
for 1997.
OPINION
This case involves the question whether petitioners are
entitled to NOL carryforward deductions for 1996 and 1997 in
amounts greater than those which respondent allowed in the notice
of deficiency. To decide that issue, we must determine whether
petitioners have adequately substantiated their claimed costs and
expenses in their construction project for purposes of computing
the NOL for 1992.
A. Net Operating Loss Carryforward Deductions
Deductions are a matter of legislative grace, and the
taxpayer bears the burden of proving that he is entitled to any
deductions claimed. Rule 142(a); INDOPCO, Inc. v. Commissioner,
503 U.S. 79, 84 (1992). In certain circumstances, if the
taxpayer introduces credible evidence with respect to any factual
issue relevant to ascertaining his tax liability, the
Commissioner shall have the burden of proof with respect to that
issue. Sec. 7491(a)(1). Section 7491 was added to the Code by
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011