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following determinations:5
1. The $11,606,771 and $15,301,146 grantor trust
losses for 1999 and 2000 flowed from Evergreen
Trading to the Arlene Nussdorf Trust then to your
1040s, interest income in the amounts of ($2,488)
and ($2,842) for 1999 and 2000 flowed from Ever-
green Trading to the Arlene Nussdorf Trust then to
your 1040s, Investment interest of $83,527 and
$195,776 for 1999 and 2000 flowed from Evergreen
Trading to the Arlene Nussdorf Trust then to your
1040s, Short term capital gain of ($324) for 2000
flowed from Evergreen Trading to the Arlene
Nussdorf Trust then to your 1040. All of these
items are disallowed because you have failed to
establish (1) that the purported loss was sus-
tained in any amount by either you or any entity
in which you held an interest, (2) that the trans-
action purportedly generating the loss in question
was entered into for profit within the meaning of
I.R.C. Section 165(c)(2), or (3) that any portion
of the loss in question is allowable as a deduc-
tion under any other provision of the Internal
Revenue Code. You have also failed to establish
that, even if loss was sustained and would other-
wise be deductible, any deduction relating to the
loss is not specifically limited or disallowed by
any provision of the Internal Revenue Code, in-
cluding without limitation §§165, 183, 212,
704(d), 1366(d), or 465.
2. It is further determined that to the extent the
loss in question is attributable to an investment
in offsetting options, the loss is disallowed
because the transactions were entered into for
purposes of tax avoidance. The transactions giv-
ing rise to the loss, including the formation of
the purported partnership, Arlene Nussdorf Trust’s
acquisition of an interest in the partnership, the
purchase of the offsetting options, the subsequent
5For convenience, we quote from the notice of deficiency
that respondent issued to petitioner Arlene Nussdorf in the case
at docket No. 24289-05. That notice of deficiency is virtually
the same as the respective notices of deficiency that respondent
issued to petitioners in the cases at docket Nos. 24297-05 and
24301-05.
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Last modified: November 10, 2007