Melvin D. Lee - Page 7

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          local income taxes.  Petitioner is not entitled to deduct the               
          claimed $13,853 in State and local income taxes in excess of the            
          $3,532 allowed by respondent.                                               

          Net Operating Loss Carryforward -- $25,990                                  
               Section 172 allows an NOL deduction to a taxpayer equal to             
          the total of the NOL carryforwards and carrybacks to the year.              
          Sec. 172(a).  Absent an election to the contrary, NOLs are to be            
          carried back to the 3 prior years, and then, if not fully                   
          absorbed, are to be carried forward to subsequent years up to a             
          maximum of 15 years.  Sec. 172(b)(1)(A), (2), and (3).1                     
               Taxpayers bear the burden of establishing both the existence           
          and amount of NOL carrybacks and carryforwards.  Rule 142(a);               
          Keith v. Commissioner, 115 T.C. 605, 621 (2000); Jones v.                   
          Commissioner, 25 T.C. 1100, 1104 (1956), revd. and remanded on              
          other grounds 259 F.2d 300 (5th Cir. 1958).                                 
               We may consider facts relating to years not in issue that              
          are relevant to the claimed NOLs.  Sec. 6214(b).                            
               The only evidence petitioner has presented with regard to              
          the $25,990 claimed 1996 NOL carryforward is his 1996 individual            
          Federal income tax return.                                                  

               1For tax years beginning on or after Aug. 5, 1997, net                 
          operating losses are to be carried back 2 years and then carried            
          forward up to a maximum of 20 years.  Taxpayer Relief Act of                
          1997, Pub. L. 105-34, sec. 1082(a)(1), 111 Stat. 950.                       

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