- 17 -
economic business unit. See Amorient, Inc. v. Commissioner, 103
T.C. 161, 168 (1994). Those regulations, however, do not treat a
consolidated group on a pure single entity basis for purposes of
computing the CNOL. See secs. 1.1502-21A(f), 1.1502-12, Income
Tax Regs. Because Lynchburg had no separate loss under section
1.1502-12, Income Tax Regs., Lynchburg had no SLL. Rather,
Lynchburg's SLL deductions were offset by its 1992 gross income.
Because Lynchburg's SLL deductions were absorbed by its current
income, those deductions were not taken into account in computing
the group's CNOL. Accordingly, the group's CNOL did not include
any SLL attributable to Lynchburg. Where a group has deductions
in excess of gross income, the group cannot characterize part of
its CNOL as SLL merely because a member had deductions of a type
that would otherwise qualify as SLL.12
Petitioner contends that Amtel Inc. v. United States, supra,
and Norwest Corp. and Subs. v. Commissioner, supra, are readily
distinguishable from the instant case.13 Although neither case
12 As discussed infra, because we conclude that the deductions
for the taxes and interest in issue were not taken into account
in the computation of the group's CNOL, we do not consider
whether the deductions for taxes and interest otherwise qualify
as SLL within the meaning of sec. 172(f).
13 Petitioner also cites an unpublished Order from the United
States District Court for the Western District of North Carolina
in United Dominion Indus., Inc. v. United States, 82 A.F.T.R.2d
98-5037, 98-2 U.S.T.C. par. 50527 (W.D.N.C. 1998), as support for
its position. On facts similar to the instant case, the court in
United Dominion examined the interplay between sec. 172(j),
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