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of that activity. See sec. 162; Rule 142(a); INDOPCO Inc. v.
Commissioner, 503 U.S. at 84; Welch v. Helvering, 290 U.S. at
115.
IV. The Loss Carryforward
Petitioner’s 2002 Federal income tax return reflects a loss
carryforward of $16,192 from prior years. The Schedule C
activities from those prior years giving rise to the loss are the
same ones at issue in this case. Respondent denied petitioner’s
claimed loss deduction on the basis of sections 183 and 162.
At the outset, we note that section 172 permits taxpayers to
carry net operating losses (NOLs) from one taxable year to
another, but generally requires that taxpayers first carry such
losses back 2 years. Sec. 172(b)(1)(A) and (2). Taxpayers may
elect only to carry forward their NOLs, but the statute requires
an express and irrevocable election. Sec. 172(b)(3). Petitioner
did not provide the Court with any information as to whether
such an election had been made.
Further, as we find that petitioner’s activities were not
engaged in with the requisite profit objective to meet the
standard set out in section 183, and as petitioner has failed to
demonstrate that any expenses incurred were reasonable and
necessary to carrying on an active trade or business pursuant to
section 162, we hold for respondent on this issue.
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