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capital loss was to introduce Federal income tax returns from
prior years on which capital loss carryovers were claimed.
As explained earlier, income tax returns merely reflect
taxpayers’ claims. They do not establish the facts reflected
therein. Without additional evidence of the original claimed
capital loss, petitioner’s tax returns are insufficient to
substantiate his entitlement to the claimed $206,881 capital loss
carryover to 1997.
Petitioner argues that respondent’s acceptance without
adjustment of his prior year income tax returns on which
petitioner claimed a carryforward of the capital loss now estops
respondent from contesting that the underlying capital loss
occurred. We disagree. Respondent is not bound in any given
year to allow the same treatment or the same deductions not
disallowed in prior years. See Lerch v. Commissioner, 877 F.2d
624, 627 n.6 (7th Cir. 1989); Pekar V. Commissioner, 113 T.C. 158
(1999).
Petitioner’s claimed $206,881 capital loss carryforward to
1997 is denied.
Peach Tree Property Suspended Losses -- $35,289
In general, no deduction is allowed in a year for an
individual taxpayer’s passive activity losses in excess of
passive activity income, but the excess losses may be carried
forward to subsequent years to offset subsequent passive activity
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Last modified: May 25, 2011