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years. Sec. 172(b)(1)(A), (2), and (3).2 Petitioner, as a
taxpayer attempting to deduct an NOL, bears the burden of
establishing both the existence of the NOL and the amount of any
NOL that may be carried over to the subject years.3 See Rule
142(a)(1); United States v. Olympic Radio & Television, Inc.,
349 U.S. 232, 235 (1955); Keith v. Commissioner, 115 T.C. 605,
621 (2000). As part of that burden, petitioner must prove that
he is entitled to deduct his claimed theft loss. New Colonial
Ice Co. v. Helvering, 292 U.S. 435, 440 (1934); see also Jones v.
Commissioner, 24 T.C. 525, 527 (1955); Allen v. Commissioner,
16 T.C. 163, 166 (1951). Deductions are a matter of legislative
grace and not a matter of right. United States v. Olympic Radio
2 The Taxpayer Relief Act of 1997, Pub. L. 105-34, sec.
1082(a)(1)and (2), 111 Stat. 950, amended sec. 172(b)(1)(A) to
require generally a 2-year carryback and a 20-year carryover for
NOLs incurred in taxable years beginning after Aug. 5, 1997.
Petitioner in his brief claims without discussion that the
20-year rule applies. We disagree. The NOL at issue, if in fact
incurred, was incurred well before the effective date of the
20-year rule.
3 Sec. 7491(a) was added to the Code by the Internal Revenue
Service Restructuring and Reform Act of 1998, Pub. L. 105-206,
sec. 3001(c), 112 Stat. 727, effective for court proceedings
arising from examinations commencing after July 22, 1998. Sec.
7491(a)(1) provides that the burden of proof shifts to the
Commissioner in specified circumstances. Petitioner makes no
argument that sec. 7491(a)(1) applies to this case, and we
conclude that it does not. See, e.g., sec. 7491(a)(2) (sec.
7491(a)(1) applies with respect to an issue only if the taxpayer
meets certain requirements); see also Mediaworks, Inc. v.
Commissioner, T.C. Memo. 2004-177.
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