- 12 -
We must next determine whether the $450,000 payment is
included in the NOL's available to petitioners from the
bankruptcy estate for the 1990 taxable year. Section 172(c)
defines "NOL" as the excess of deductions over the taxpayer's
gross income, subject to modifications of section 172(d). In
determining whether there is an excess of deductions over gross
income, capital losses are allowed only to the extent of capital
gains. Sec. 172(d). Net capital losses are excluded from the
NOL computation by section 172(d)(2).
We have concluded that petitioner's $450,000 payment is
deductible only as a nonbusiness bad debt. Under section 166(d),
a nonbusiness bad debt is deductible only as a short-term capital
loss. Therefore, we hold that petitioners are not entitled to
include the payment in computing NOL's from petitioner's
bankruptcy estate.
To reflect the foregoing,
Decision will be
entered for respondent.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12
Last modified: May 25, 2011