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settlements between the bankruptcy trustee and respondent with
regard to the bankruptcy estate's Federal income tax liability.
In the motion, petitioner contended that, on the Federal income
tax returns the trustee had filed on behalf of petitioner's
bankruptcy estate, the trustee improperly reflected and claimed
carryforward deductions of petitioners' 1975-NOL.
On July 6, 1988, the Bankruptcy Court denied petitioner's
motion to stay all bankruptcy proceedings and issued an order in
which it held that the specific amount of the 1975-NOL (namely,
$1,517,999) had been properly determined through settlement
negotiations between the trustee and respondent, that the 1975-
NOL should be treated as property of petitioner's bankruptcy
estate, not of petitioner personally, and that the trustee was
entitled to carry forward the 1975-NOL on the bankruptcy estate's
Federal income tax returns until the bankruptcy estate exhausted
the amount of the 1975-NOL or abandoned it (upon termination of
the bankruptcy proceeding), or upon expiration of the 5-year
period applicable to carry forward of the 1975-NOL.
On June 7, 1990, the District Court affirmed the Bankruptcy
Court's decision regarding the bankruptcy estate's entitlement to
the 1975-NOL, applying Segal v. Rochelle, 382 U.S. 375 (1966).
In re Beery, 116 Bankr. 808 (D. Kan. 1990). In Segal v.
Rochelle, supra, the Supreme Court held that a tax refund claim
based upon a net operating loss carryback should be treated as
property of the bankruptcy estate and not of the bankrupt.
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