- 12 - 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.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 NextLast modified: March 27, 2008