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treatment of the losses he claimed for the intervening years
1987-90. If petitioner was engaged in the drilling business in
1986, the net operating loss carryover taken as a deduction in
1991 was proper, because the loss would have been incurred in the
operation of a trade or business. See, e.g., Swisher v.
Commissioner, 33 T.C. 506, 510 (1959).9
Respondent maintains that the business begun by petitioner
in 1978 ended in 1981 when petitioner accepted overseas
employment, and that, upon returning from Norway, petitioner
began a new activity that never became a trade or business.
Petitioner maintains that his business continued from 1978
through 1991 and thereafter, and that his purchase of and work on
the second drill rig and efforts to obtain contracts for its use
were a continuation of his preexisting business.
It is sometimes necessary to decide whether a taxpayer
has terminated his business (so that expenditures to
reenter the area are not incurred in “carrying on” the
business) or has only suspended business activities
temporarily, in which event the taxpayer's status
continues for purposes of Section 162(a). [Bittker &
9Respondent, in her notice of deficiency, determined that
petitioner was not engaged in business in 1986 and therefore
disallowed the net operating loss from that year. Respondent did
not determine alternatively that, even if petitioner was engaged
in a trade or business in 1986, he was not engaged in business in
the intervening years 1987 through 1990. It would follow, if
petitioner was not engaged in business or income production
during the intervening years, that petitioner's income from these
years would have absorbed the net operating loss from 1986,
leaving nothing to be carried forward to 1991. Respondent did
not make this argument, and we do not address it.
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