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Memo. 2003-38 (Beery II). At issue in Beery II was the propriety
of respondent’s decision to proceed with the collection of
Federal income taxes and penalties for the taxable year 1994.
This Court issued an opinion in Beery II on February 20, 2003, in
which the Court upheld the validity of Beery I, holding that the
1975 NOL carryforward expired on December 31, 1980, and that this
Court was not required to take any further action to enforce
Beery I when the U.S. District Court issued its order lifting the
bankruptcy stay. See id. Therefore, we find no merit in
petitioners’ argument that Beery I is invalid because this Court
entered the decision while the automatic stay provisions of the
Bankruptcy Code were in effect.
We also note that Mr. Beery made no effort at trial to prove
the existence or amount of the 1975 NOL carryforward that he
alleged was available to petitioners to deduct on their 1998 and
1999 returns. Deductions are a matter of legislative grace, and
the taxpayer bears the burden of proving his entitlement to the
deduction he claimed.7 Rule 142(a); New Colonial Ice Co. v.
Helvering, 292 U.S. 435, 440 (1934); Welch v. Helvering, 290 U.S.
7Where the taxpayer produces credible evidence with respect
to any factual issue relevant to ascertaining the tax liability
of the taxpayer, the burden of proof shifts to the Secretary, but
only if the taxpayer has complied with substantiation
requirements, maintained all required records, and has cooperated
with reasonable requests by the Secretary for witnesses,
information, documents, meetings, and interviews. Sec. 7491(a).
Petitioners do not contend that sec. 7491(a) applies to this
case.
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