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New Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934);
Welch v. Helvering, 290 U.S. 111, 115 (1933).
Under pre-1980 law, neither bankruptcy law nor the Internal
Revenue Code clearly established the ownership of tax attributes
of a bankruptcy estate. Mueller v. Commissioner, 60 T.C. 36, 44
n.6 (1973), affd. in part, revd. in part, and remanded 496 F.2d
899 (5th Cir. 1974); 1A Collier on Bankruptcy, par. 9.02(3)(a),
at 9-6 (15th ed. 1996). As indicated above, the Supreme Court in
Segal v. Rochelle, supra, applying the provisions of the
Bankruptcy Act of 1898, ch. 541, 30 Stat. 544, as amended, held
that a claim for refund based on an NOL carryback was to be
treated as property of the bankruptcy estate and not of the
individual taxpayer. The Supreme Court in Segal expressly
reserved the issue of whether the same rule applied to NOL
carryforwards.
In Davis v. Commissioner, 69 T.C. 814 (1978), this Court,
applying the Bankruptcy Act of 1898, held that, unlike refund
claims based on NOL carrybacks, NOL carryforwards arising from
prebankruptcy businesses belonged not to the bankruptcy estate
but to the individual taxpayer. See also Matter of Luster, 981
F.2d 277 (7th Cir. 1992).
As part of the Bankruptcy Tax Act of 1980, Pub. L. 96-589,
94 Stat. 3389, Congress clarified this area of the law and
enacted section 1398, which directly addresses the tax
implications of bankruptcy. Section 1398 expressly provides that
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