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submitted fully stipulated under Rule 122.1 On their 1994 income
tax return, petitioners attempted to waive the carryback of their
claimed net operating loss (NOL). Petitioners now claim their
attempt was without effect. The question we consider is whether
petitioners properly elected to waive the carryback of an NOL
under section 172(b)(3) and whether that election is binding.
Background--Petitioners resided in Yorba Linda, California,
at the time their petition was filed in this case. Petitioners
filed a timely 1991 joint Federal income tax return reflecting a
$11,231 income tax liability. Petitioners filed a timely 1994
joint Federal income tax return containing the following
statement:
The above named taxpayer incurred a net operating loss
in the taxable year ending December 31, 1994 and is
entitled to a three-year carryback period with respect
to that loss under Code Section 172(B)(1) of the
Internal Revenue Code.
Pursuant to Code Section 172(B)(3), the taxpayer hereby
elects to relinquish the entire carryback period with
respect to the net operating loss incurred in the
taxable year ending December 31, 1994.
Prior to filing their 1994 return, petitioners had claimed a
NOL for their 1993 taxable year that had been carried back to
their 1991 tax year and caused the elimination of their 1991
income tax liability. After petitioners had filed their 1994
1 All Rule references are to this Court’s Rules of Practice
and Procedure and all section references are to the Internal
Revenue Code, in effect for the taxable year in question.
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