DocketNumber: Docket No. 28455-91
Judges: PANUTHOS
Filed Date: 6/10/1993
Status: Non-Precedential
Modified Date: 11/20/2020
MEMORANDUM FINDINGS OF FACT AND OPINION
PANUTHOS,
FINDINGS OF FACT
This case was submitted fully stipulated pursuant to Rule 122(a). All stipulated facts are found accordingly. The attached exhibits are incorporated by reference. Petitioners resided in Portland, Oregon, when they filed the petition herein.
On November 27, 1985, petitioner purchased a 1986 Porsche 911 Targa for $ 40,882 (hereinafter the automobile). The automobile was insured by the Farmers Insurance Group from December 12, 1985, until March 3, 1986. The automobile was uninsured after that date.
On November 14, 1987, petitioner was involved in an accident while driving the uninsured automobile. There was no third party involved in the accident. Petitioner suffered minor injuries which required some medical attention. The automobile was "totaled" except for its salvage value. On the night of the accident, the automobile was towed to Western World Recovery, Inc. (hereinafter Western World), an auto body shop located in Portland, Oregon. Upon arrival of the automobile, Western World inquired of several 1993 Tax Ct. Memo LEXIS 259">*261 auto wrecking yards whether anyone was interested in purchasing the automobile for parts and accessories. Western World received an offer from an individual to purchase the automobile for $ 1,500 (hereinafter sometimes referred to as the salvage value payment), which petitioner accepted.
Petitioners did not claim a casualty loss deduction on their 1987 Federal income tax return. Rather, petitioners claimed a casualty loss deduction of $ 39,382 on a Form 4684, Casualties and Thefts, filed with their 1988 Federal income tax return. On a statement attached to their 1989 Federal income tax return, petitioners' claimed a carryforward loss deduction of $ 21,415, associated with the unused portion of the 1988 casualty loss. Petitioners characterized the carryforward loss as a "net operating loss carryover".
The parties stipulated that "the loss sustained by the petitioners because of this accident is deductible under
Petitioners contend that 1988 was the proper year to claim the casualty loss deduction. They argue that the salvage value payment was received in 1988 and that it was not until this time that they were able to realize their loss for purposes of
OPINION
We can consider whether the casualty loss deduction was properly claimed on the 1988 return for purposes of determining the allowance of the 1989 carryforward loss deduction. See sec. 6214(b);
A casualty loss deduction must be claimed in the appropriate year. See
Petitioners assert that the salvage value payment, purportedly received in 1988, constituted the closing of the transaction for purposes of the deductibility of the casualty loss. We do not agree. Rather, we hold that petitioners failed in their burden of proof to establish that the loss, as evidenced by a closed and completed transaction, occurred in 1988 rather than 1987.
The evidence indicates that petitioner agreed to sell his automobile to an individual on or about November 20, 1987. The record contains a copy of a letter (dated February 20, 1991) written by petitioner to the Internal Revenue Service (IRS). In the letter, petitioner states: John Moore of Woodland Auto Body 1993 Tax Ct. Memo LEXIS 259">*265 in purchasing the automobile for parts, etc. Six or seven days later a party named Thomas contacted him and indicated he had heard about the car. At that time I was contacted to see if I would accept $ 1500 for the car. I said I was interested. I gave John Moore the title to the car and Thomas gave him $ 1500 in cash. He also gave John a receipt to this effect. He then towed the car away and that was the last he saw of him.
The record also contains a copy of an invoice dated November 14, 1987 (1:50 a.m.) from Western World. The invoice reflects that the automobile was towed from the accident scene and stored for 7 days. This is supported by a handwritten entry across the face of the invoice1993 Tax Ct. Memo LEXIS 259">*266 indicating that Western World was paid by petitioner for its services on November 20, 1987.
The documents, when viewed together, reflect that petitioner entered into an agreement to sell the automobile on or about November 20, 1987, and, therefore, completed the transaction. There is some evidence in the record that the $ 1,500 may not have been received by petitioners until January 13, 1988.
1993 Tax Ct. Memo LEXIS 259">*267 Having found that petitioners claimed the casualty loss in the wrong year (1988 rather than 1987), we need not decide respondent's alternative argument that petitioner was willfully negligent in (1) failing to operate the automobile in a safe manner, and (2) failing to insure the automobile. We note, however, that respondent's argument with respect to the lack of insurance is contrary to the regulations. The regulation,
Based upon our finding that petitioners failed to establish that the loss actually occurred in 1988, as fixed by identifiable events, we hold that petitioners are not entitled to claim a carryforward loss deduction of $ 21,415 in the tax year 1989. 1993 Tax Ct. Memo LEXIS 259">*268 Furthermore, we deny petitioners' request for an award of litigation costs because the request was premature and petitioners are not the prevailing party. Sec. 7430; Rule 231(a)(2).
1. All section references are to the Internal Revenue Code in effect for the tax year at issue. All Rule references are to the Tax Court Rules of Practice and Procedure.↩
2. There appears to be a discrepancy between the name of the auto body shop referred to in the letter and the auto body shop referred to in the stipulation of facts. The Court assumes that petitioner inadvertently referred to the auto body shop as Woodland Auto Body in the letter rather than Western World Recovery, Inc.↩
3. A copy of a receipt dated Jan. 13, 1988, which reflects petitioner's name, a dollar amount of $ 1,500, and refers to petitioner's automobile was made part of this record.↩
4. Even if we had determined that the casualty was sustained in 1988, there is some question as to whether petitioners would be entitled to deduct a carryforward loss in 1989. Sec. 172(b)(1)(A)(i) and (ii) provides that a net operating loss for any year shall first be carried back to each of the 3 years preceding the taxable year of the loss and then carried forward to each of the 15 years following the taxable year of the loss. There is no indication that petitioners made a sec. 172(b)(3) election.↩