Allan & Judy N. Green - Page 7

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          a detailed schedule showing the computation of the NOL deduction.           
          Sec. 1.172-1(c), Income Tax Regs.                                           
               Section 172(c) defines the term “net operating loss” as “the           
          excess of the deductions allowed by this chapter over the gross             
          income.  Such excess shall be computed with the modifications               
          specified in subsection (d).”  In the case of individuals such as           
          petitioners, the list of modifications in subsection (d) includes           
          that “No net operating loss deduction shall be allowed”, that “No           
          deduction shall be allowed under section 151 (relating to                   
          personal exemptions)”, and that “the deductions allowable by this           
          chapter which are not attributable to a taxpayer’s trade or                 
          business shall be allowed only to the extent of the amount of the           
          gross income not derived from such trade or business”.  Sec.                
          172(d)(1), (3), and (4).                                                    
               Petitioners’ counsel acknowledged at trial that petitioners            
          bear the burden of proof in this case.  Petitioners, as taxpayers           
          attempting to deduct NOLs, bear the burden of establishing both             
          the existence of the NOLs and the amount of any NOL that may be             
          carried over to the subject years.  Rule 142(a)(1); United States           
          v. Olympic Radio & Television, Inc., 349 U.S. 232, 235 (1955);              
          Keith v. Commissioner, 115 T.C. 605, 621 (2000); Jones v.                   
          Commissioner, 25 T.C. 1100, 1104 (1956), revd. and remanded on              
          other grounds 259 F.2d 300 (5th Cir. 1958).  Such a deduction is            
          a matter of legislative grace; it is not a matter of right.                 

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