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1999 2000 2001
Net short-term capital gain or (loss)1 ($27,672) ($1,781,652) ($2,109,359)
Net long-term capital gain or (loss)2 (9,825) (2,609) (107,733)
Total net capital loss3 (37,497) (1,784,261) (2,217,092)
1 The net short-term capital loss for each taxable year included short-term
carryover losses to 1999, 2000, and 2001 of $111,114, $27,672, and $1,781,652,
respectively.
2 The net long-term capital loss for each taxable year included long-term
carryover losses to 1999, 2000, and 2001 of $21,391, $9,825, and $2,609,
respectively.
3 For each taxable year, petitioners deducted the maximum of $3,000 of their
overall capital losses against ordinary income on their Form 1040, Line 13 (Capital
gain or (loss)). See sec. 1211(b).
In the notice of deficiency, respondent disallowed a portion
of petitioners’ investment interest expense deductions for 1999,
2000, and 2001 in the amounts of $26,076, $38,784, and $49,483,
respectively.3 Respondent contends that petitioners’ “gross
income from property held for investment” for 1999, 2000, and
2001 was $5,139, $4,487, and $453, respectively.4 Respondent
also argues that because petitioners had a total net capital loss
in each of the taxable years at issue, petitioners had zero “net
gain from the disposition of property held for investment” for
purposes of determining their “net investment income” for each
taxable year.5
3 Respondent concedes that the disallowed portion of
investment interest expense deduction for 2001 erroneously
includes otherwise deductible mortgage interest.
4 Petitioners concede these amounts of “gross income from
property held for investment” for each taxable year at issue.
5 Respondent also concedes the amount of investment
interest expenses claimed by petitioners for each taxable year at
issue.
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Last modified: May 25, 2011