Andrew S. Burg

03-13

The Taxpayer filed New Mexico personal income tax returns for tax years 1998 and 1999. The Internal Revenue Service examined his 2000 return and recognized the Taxpayer as a professional stock trader and allowed him to claim a net operating loss (NOL) for losses suffered in the stock market. Federal law allowed the Taxpayer to carry the NOL back against his federal liabilities for 1998 and 1999, and the IRS told him he could apply the NOL against his New Mexico liabilities for the same years. The Taxpayer amended both New Mexico returns to claim refunds. The Department denied the refund claims, and the Taxpayer filed a written protest. Held:  New Mexico law does not allow NOLs to be carried back to prior years, and NOLs established for the first time in the Taxpayer’s 2000 return cannot be used to offset 1998 and 1999 tax liabilities. The Taxpayer also contended the IRS gave him erroneous advice, and the federal Securities and Exchange Commission failed to carry out its oversight responsibilities properly. The Hearing Officer does not have jurisdiction to review the actions of federal agencies, nor is the Department bound by erroneous advice given by such agencies. Protest denied.