- 6 -
years. Petitioner carried back $27,356,042 of the FTC to 1977,
which, along with other credits from 1980 (work incentive credits
and new jobs credits) in the amount of $342,819, satisfied its
tax liability for 1977. Because of ITC limitation rules found in
section 46(a)(3) and (4),5 the 1979 ITC originally carried back
to 1977 could no longer be used (since there was now, as of 1982,
after application of the FTC, no tax liability for 1977 against
which it could be applied), and was thus displaced and
subsequently carried over to 1981, a year not at issue. As a
result of the NOL's causing the release and carryback of the 1979
FTC to 1977 (and the consequent release of the ITC), there was as
of March 15, 1983 (the due date for the 1982 return)6 an
overpayment of $9,089,070 for petitioner's 1977 tax year.7
5 For 1977, sec. 46(a)(3) and (4) limits available ITC to
$25,000 plus 50 percent of tax remaining after the application of
the FTC allowable for that year. The $25,000 limit was taken up
with ITC that arose and was used in 1977, and that is otherwise
not at issue. Also under sec. 38(c), effective for carrybacks
from tax years after Dec. 31, 1983, amounts of FTC must be
applied before any amounts of ITC.
6 See supra note 3.
7 The ITC at this point no longer affected petitioner's
substantive tax liability for 1977.
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