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enumerated in section 1221(a). One such category includes
depreciable property and real property used in the taxpayer’s
trade or business. Sec. 1221(a)(2).
In general, a taxpayer’s capital losses are allowed only to
the extent of the taxpayer’s capital gains, plus $3,000, in any
given taxable year. Sec. 1211(b). However, where a taxpayer’s
losses are not allowed in a given taxable year due to
insufficient capital gains, the losses generally may be carried
over from year to year until the entire amount of the losses is
allowed. Sec. 1212(b).
Petitioners argue that they are entitled to capital loss
carryovers with respect to losses they sustained in connection
with a partnership known as Tara of North Hills (Tara). Over the
years, petitioners had invested a large amount of money in this
partnership, which owned an apartment complex. Petitioners were
also involved in the management of the complex. Tara entered
into bankruptcy proceedings in the late 1980s.
It is unclear whether petitioners ever recognized a loss
from the sale or exchange of a capital asset in connection with
Tara. See secs. 1221 and 1222. While petitioners introduced
into evidence numerous documents purporting to show their
investment in the partnership and the result of the bankruptcy
proceedings, petitioners have failed to substantiate the amount
of any loss sustained with respect thereto, and whether any such
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Last modified: May 25, 2011