- 6 -
OPINION
Respondent contends that petitioners must reduce Susan's NOL
to zero because they excluded COD income pursuant to section
108.6 Petitioners first argue that James' release from his
5(...continued)
NOL generated in 1991 878,025 439,012 439,013
NOL before sec.
108 Reduction 3,113,444 1,556,719 1,556,725
Sec. 108 NOL Reduction
in 1990 (751,610) (751,610) -0-
Sec. 108 NOL Reduction
in 1991 (708,059) (708,059) -0-
NOL carryover to 1992 1,653,775 97,050 1,566,725
NOL utilized in 1992(1,166,045) (97,050) (1,068,995)
Carryforward to 1993 487,730 -0- 487,730
6 Sec. 108, in pertinent part, provides:
(a) Exclusion From Gross Income.--
(1) In General.--Gross income does not include any
amount which (but for this subsection) would be includible
in gross income by reason of the discharge (in whole or in
part) of indebtedness of the taxpayer if--
* * * * * * *
(B) the discharge occurs when the taxpayer is
insolvent,
* * * * * * *
(b) Reduction of Tax Attributes.--
(1) In General.--The amount excluded from gross income
under subparagraph (A), (B), or (C) of subsection (a)(1)
shall be applied to reduce the tax attributes of the
taxpayer as provided in paragraph (2).
(2) Tax Attributes Affected; Order of Reduction.--
Except as provided in paragraph (5), the reduction referred
(continued...)
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