Edgardo Villanueva v. Comm., TCM 2022-27
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“Concise Statement” Required for NOL Deduction (Edgardo Villanueva v. Comm., TCM 2022-27)
Edgardo Villanueva reported a loss of $112,375 on Form 4797, Sales of Business Property, attached to his 2013 return, from the disposition of a condominium. He reported the date of loss as Aug. 5, 2013, although the condominium went through foreclosure in May 2009 and Villanueva lost possession of the condominium at that time. The Court determined that because Villanueva sustained the loss in 2009 when the foreclosure occurred, the deduction, if allowable, would have been for 2009. Villanueva was not permitted to carry forward any portion of that loss to 2013 because he incorrectly reported the disposition, and he did not include a concise statement setting forth the amount of the net operating loss deduction claimed.
Tax practitioner note. A taxpayer claiming a net operating loss (NOL) deduction must file with his return “a concise statement setting forth the amount of the [NOL] deduction claimed and all material and pertinent facts relative thereto, including a detailed schedule showing the computation of the [NOL] deduction” (Treas. Reg. § 1.172-1(c)).