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deduction of $28,963 from the available $129,971 net operating
loss carryover from 1995 and 1996. As a result, petitioner
reported no taxable income for 1997.
Petitioner’s 1996 and 1997 Forms 1120 do not include any
interest expense or interest income from the crediting of the
annual installments on the Amoco note.
In the notice of deficiency issued to petitioner, respondent
determined that the Amoco advance was income to petitioner in
1996. As a result of that determination, respondent increased
petitioner’s income for 1996 by $164,792 and decreased
petitioner’s income by $17,500 for 1997. Respondent also
adjusted petitioner’s 1996 income to reflect the $38,317 net
operating loss carryover from 1995, resulting in taxable income
of $34,821 for 1996 and eliminating any net operating loss
carryforward to 1997. The adjustments for 1997 resulted in
taxable income of $11,463 for that year.
OPINION
Gross income includes income from whatever source derived.
Sec. 61(a). Income is defined as “undeniable accessions to
wealth, clearly realized” by a taxpayer over which the taxpayer
has “complete dominion”. Commissioner v. Glenshaw Glass Co., 348
U.S. 426, 431 (1955). If there is no clearly realized accretion
to wealth resulting from a transaction, then there is no income
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Last modified: May 25, 2011