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Ultimately, respondent determined that the loss available
for use against the 1993 income should be reduced by the amount
of the loss which would have been absorbed if carried back to
pre-1990 fiscal years.
OPINION
Taxpayers are permitted to carry net operating losses from
one taxable year to another. See sec. 172(a). In general,
taxpayers who sustain NOL’s must first carry such losses back 3
years, and, if unabsorbed for the earlier years, then the losses
may be carried forward, for as long as 15 years. See sec.
172(b)(1)(A) and (2). A taxpayer, however, may elect to
relinquish the 3-year carryback period and simply carry a loss
forward. See sec. 172(b)(3). To make this election, the statute
expressly requires taxpayers to file an election relinquishing
the carryback period by the return due date, including any
extensions of time, for the taxable year in which the NOL was
first incurred. Once made, the election is irrevocable. The
statute directs the Secretary to prescribe the manner in which
taxpayers shall make the election. See id.
The Secretary promulgated the following requirements for
making the election:
[The election] shall be made by a statement attached to
the return (or amended return) for the taxable year.
The statement required * * * shall indicate the section
under which the election is being made and shall set
forth information to identify the election, the period
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