Diesel Performance, Inc. - Page 5




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               On petitioner's original Form 1120 for the taxable year                
          ending June 30, 1991, petitioner reported a loss of $11,877.                
          Petitioner included with the original return its election to                
          waive the carryback period for the reported loss.                           
               On petitioner's amended Form 1120X for the taxable year                
          ending June 30, 1991 (filed on or about April 20, 1994),                    
          petitioner reported a loss of $79,007.                                      
                                     Discussion                                       
               Respondent determined that petitioner did not make a timely            
          election to waive the carryback period on the amended return for            
          the tax year ending June 30, 1992.  Petitioner asserts that it              
          did make a valid election to relinquish the carryback period with           
          respect to its net operating loss for the tax year ending June              
          30, 1992.                                                                   
               In general, section 172 allows a deduction for an amount               
          equal to the aggregate of the net operating loss carryovers to a            
          taxable year plus the net operating loss carrybacks to that year.           
          See sec. 172(a).  Section 172(b), as in effect for the years at             
          issue, required that a net operating loss first be carried back             
          to each of the 3 previous taxable years and, if it was unabsorbed           
          by those years, that the remaining portion be carried forward to            
          the 15 following taxable years.  See sec. 172(b)(1) and (2).                
               Section 172(b)(3), however, provides that a taxpayer may               
          elect to relinquish the entire carryback period and carry forward           





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