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and bearing a U.S. Postal Service stamp dated April 3, 1996.
On March 27, 1997, petitioners jointly filed a Form 1040,
U.S. Individual Income Tax Return, for the 1995 taxable year (the
1995 return). The 1995 return did not purport to be an amended
tax return. On an attached Form 8582, Passive Activity Loss
Limitations, petitioners reported a total passive activity loss
of $159,683. On line 17 of the 1995 return, petitioners claimed
a rental real estate loss in the amount of $25,000. Petitioners
did not submit with the 1995 return an election to forgo the
carryback period with respect to an NOL, and nothing on the 1995
return itself suggested that petitioners intended to make such an
election.
Petitioners jointly filed a Form 1040 for the 1996 taxable
year (the 1996 return) on April 13, 2001. On line 21 of the 1996
return, petitioners claimed a loss in the amount of $59,032. A
statement attached to the 1996 return indicated that such loss
was an NOL “from a prior year”.
In the notice of deficiency, respondent disallowed the
$59,032 NOL carryover claimed by petitioners on their 1996
return. Respondent determined that petitioners had not elected
under section 172(b)(3) to waive the carryback of the 1995 NOL.
Petitioners contend that the April 4, 1996 letter allegedly
mailed to respondent with the so-called draft return was a valid
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