Opinion ID: 778136
Heading Depth: 2
Heading Rank: 2

Heading: The Net-Operating-Loss Carryforwards

Text: 22 Taxpayer also argues that the Tax Court erred by sustaining the IRS's disallowance of his claimed net-operating-loss carryforwards. He contends that the IRS bore the burden of establishing that the claimed deductions were erroneous, that he provided sufficient evidence to be entitled to the deductions, and that the IRS provided no evidence to support its disallowance. 23 Regarding the burden of proof, taxpayer is incorrect. The taxpayer bears the burden of establishing entitlement to claimed deductions. 26 U.S.C. § 7453; Tax Court Rule 142(a); Bennett Paper Corp. v. Commissioner, 699 F.2d 450, 453 (8th Cir.1983). In this case, the original books and records of the two S corporations were lost, and taxpayer furnished no explanation for their absence. In their place, taxpayer submitted his individual tax returns for the years 1986 to 1992, some of the relevant S corporations' tax returns, and the testimony of his accountant. The Tax Court held that this evidence did not meet taxpayer's burden of proof. 24 We hold that the decision of the Tax Court—that taxpayer failed to sustain his burden of proof—is not clearly erroneous. The trial court is not required to accept even uncontradicted testimony. Askew v. Commissioner, 805 F.2d 830, 832 (8th Cir.1986). Here, the lack of tax returns from the Subchapter S corporations for all of the relevant years, in addition to the complete absence of underlying record evidence, affected the Tax Court's determination. And it was within the Court's discretion not to credit the testimony of taxpayer and his accountant.