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did not request any further extensions. On their 1999 return,
petitioners deducted a net operating loss (NOL) carryover in the
amount of $813,814. An NOL worksheet attached to the 1999 return
reported that the NOL in the amount of $929,297 had been carried
forward from tax year 1995 and that portions of the NOL had been
previously used in tax years 1996, 1997, and 1998.3 Although not
specifically stated in either their 1995 or 1999 returns, there
is no dispute that the NOL was attributable to losses claimed
from the expropriation of their properties in Iran.
On May 13, 2003, respondent issued to petitioner a notice of
deficiency for 1999. Respondent disallowed the NOL carryover,
and determined a deficiency of $4,009. Respondent further
determined that petitioners were liable for the delinquency
addition to tax and the negligence penalty.
3 At trial, petitioners asserted that they initially
claimed the expropriation losses in 1991 instead of 1995.
Petitioners filed a motion to dismiss for lack of jurisdiction
(motion), arguing that the notice of deficiency for 1999 was
invalid because it incorrectly determined that the NOL carryover
on their 1999 return originated in 1995 rather than in 1991. The
Court denied petitioners’ motion. Petitioners’ 1991 return was
not made part of the record in this case, and their assertion
that the losses originated in 1991 was unsubstantiated and
contradicted by statements in their 1995 return. E.g., Statement
1 attached to their 1995 return provided: “the taxpayer hereby
elects to relinquish the entire carryback period with respect to
the net operating loss incurred in the taxable year ending
December 31, 1995.” In any event, even if petitioners did
initially claim the losses on the 1991 return, the notice of
deficiency was sufficient to give petitioners notice that
respondent was disallowing the NOL that petitioners carried
forward to their 1999 return.
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