- 10 -
the limitation must be applied to the group as a whole because
(1) under the consolidated return regulations an NOL in a
consolidated group exists only on a consolidated basis, and (2)
each separate member of a consolidated group is incapable of
having its own NOL. Accordingly, petitioner concludes that
section 172(f)(2) can be applied in the consolidated group
context only by comparing the consolidated group's SLL8 for the
year with the consolidated group's CNOL for the year.
Respondent contends that petitioner is not entitled to carry
back, to 1984, any of the deductions attributable to the taxes
and interest paid by Lynchburg during 1992. Respondent argues
that the taxes and interest in issue do not qualify for the 10-
year carryback because they are not SLL's within the meaning of
section 172(f)(1)(B). Specifically, respondent argues that
section 172(f)(1)(B) was intended to apply to a "narrow class of
liabilities" to which the taxes and interest in issue do not
7(...continued)
year carryback because the group's consolidated net operating
loss (CNOL) for 1992 exceeds the amount claimed as SLL's for
1992. If, however, sec. 172(f)(2) is to be applied on a separate
company basis, none of the deductions in issue would be eligible
for the 10-year carryback, whether or not they otherwise qualify
as SLL's under sec. 172(f), because Lynchburg had separate
taxable income rather than a loss for 1992.
8 Other members of the group claimed SLL's for 1992.
Respondent allowed the carryback of some of the claimed SLL's in
the notice of deficiency, and petitioner conceded that it is not
entitled to carryback some of the claimed SLL's. The only SLL's
that remain in issue are those claimed by Lynchburg for 1992.
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