St. Charles Investment Co., Burton C. Boothby, Tax Matters Person - Page 12

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          supra; cf. sec. 1374(b)(2)5 (allowing NOL carryforward                      
          "Notwithstanding section 1371(b)(1)").  Similarly, it appears               
          Congress intended section 1371(b)(1) to apply to carryover of               
          research and other business credits.  See sec. 1374(b)(3)(B)                
          (allowing business credit carryforwards "Notwithstanding section            
          1371(b)(1)").  In short, Congress evinced an intention to                   
          recognize specific exceptions, rather than a general exception to           
          the application of section 1371(b)(1).  It does not follow, as              
          petitioner suggests, from the fact that the statute specifies               
          certain items to be excluded from the application of section                
          1371(b) for one purpose, namely built-in gains under section                
          1374, that other items are excluded from the application of                 
          section 1371(b) for other purposes.                                         
               Thus, even if section 469 is treated as an accounting                  
          method, we are still left with the question whether section                 
          1371(b)(1) applies to a particular item, in this case, PAL's.               
          Moreover, we note that, although Congress placed section 469 in a           
          part of the Code entitled "Methods of Accounting", the                      
          legislative history indicates that such treatment is not as                 
          significant as petitioner would have us believe.  The statute               
          itself and the legislative history treat section 469 separately             

               5   Sec. 1374(b) provides limited exceptions for the purpose           
          of calculating the tax on built-in gains, a tax imposed on the S            
          corporation resulting from a subchapter S election by a C                   
          corporation which at the time of the election has unrealized                
          gains on its properties.  See supra note 2.  The instant case               
          does not involve the tax on built-in gains.                                 

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