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deduction under section 165 for 1999 for the cash that petitioner
forfeited to the State of South Carolina.
Petitioners contend that petitioner’s forfeiture is invalid
because it was disproportionate to his crime and violated the
Eighth Amendment to the Constitution and, also, because it did
not comply with the laws of South Carolina. Accordingly,
petitioners conclude that they should be allowed a loss deduction
for the cash that petitioner forfeited because the “public policy
exception” applies only “when the underlying action by the
government is legal and properly conducted by the state
authorities under their own laws and the laws of the United
States”. Petitioners’ contention as to the validity of the
forfeiture, however, is not properly an issue in this Court. The
Tax Court is a court of limited jurisdiction, and we may exercise
our jurisdiction only to the extent authorized by Congress. See
sec. 7442; Naftel v. Commissioner, 85 T.C. 527, 529 (1985); see
also Commissioner v. Gooch Milling & Elevator Co., 320 U.S. 418,
420, 422 (1943). This Court lacks jurisdiction over petitioners’
collateral attack on the forfeiture.
Petitioners further contend that the damage done to South
Carolina’s policy against illegal gambling is outweighed by
congressional intent that “business losses” be allowed to be
deducted and that the income tax be imposed upon a taxpayer’s net
income. In support of this contention, petitioners cite Lilly v.
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Last modified: May 25, 2011