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On Schedule D of their 1999 return, petitioners reported
$47,555 in short-term capital gains. That amount was offset,
however, by a short-term capital loss carryover from 1998 of
$74,836, leaving a $27,281 net short-term capital loss carryover
to future years.
Petitioners also reported long-term capital gains of $29,535
during 1999 that were also totally offset by a long-term capital
loss carryover from 1998 of $99,122. This left petitioners with
a $69,587 long-term capital loss carryover to future years.
Petitioners reported dividend and interest income of $225 on
their 1999 return. Additionally, petitioners reported on a
Schedule E, Supplemental Income and Loss, net income of $17,569,
of which $17,428 came from the rental of a commercial building at
Ft. Lauderdale, Florida, and $141 from an apartment partnership.
Respondent determined that $47,555 of the investment
interest deduction claimed by petitioners was not deductible as
investment interest under section 163(d). The $225 amount that
was allowed by respondent represented the equivalent interest and
dividend income reported by petitioners that respondent agreed
represented investment income and, thus, entitled petitioners to
an itemized deduction for investment interest equal to the
investment income they reported. Sec. 163(d)(5)(A)(i), (d)(4),
(d)(1). Respondent has not questioned petitioners' payment of
the $47,780 in interest; consequently, there is no substantiation
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Last modified: May 25, 2011