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supra, 1986-3 C.B. (Vol. 3) at 722. Under section 469(b),
contrary to petitioner's contention of permanent loss, they
remain available for potential use in subsequent years if and
when St. Charles relinquishes its S status.
In sum, we are satisfied that PAL's are losses within the
meaning of section 1371. Not only is the word "carryforward" in
that section unqualified, but PAL's are in effect NOL's albeit
computed separately for a particular activity and thus should not
be treated any differently than NOL's to which section 1371
unquestionably applies.
Taking into account the language of the statute and the
legislative history, including the objective of Congress in
enacting sections 469(b) and 1371(b)(1), we conclude that St.
Charles is precluded from carrying forward its suspended PAL's to
the taxable year before us.9 We emphasize that, as our analysis
has revealed, there is no conflict between sections 469(b) and
1371(b)(1) with the result that our preclusion of use in 1991 is
grounded on the unavailability of the PAL's during that year and
their continued availability for future use.
Adjustment of Basis for Suspended PAL's
Petitioner argues in the alternative that, if respondent is
sustained on the suspended PAL's issue, St. Charles should be
9 We reiterate that this case does not involve the tax on
built-in gain pursuant to sec. 1374, and thus our holding does
not extend to the use of suspended PAL's in calculating such
gain.
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