- 12 -
The Court analyzed these requirements in Young v.
Commissioner, 83 T.C. 831 (1984), affd. 783 F.2d 1201 (5th Cir.
1986). In Young, the taxpayers sustained a net operating loss in
1976. On their 1976 Federal income tax return, the taxpayers
reported their taxable income as "None." On a Form 4625,
Computation of Minimum Tax, attached to that return, the
taxpayers entered on line 11 the amount of their 1976 net
operating loss carryover to 1977. That return contained no other
information concerning the taxpayers' 1976 net operating loss or
net operating losses from other years. See id. at 832. On
December 2, 1980, respondent received from the taxpayers an
amended Federal income tax return for 1976; the taxpayers
attached a statement thereto entitled Net Operating Loss
Computation. That statement contained a recalculation of the
taxpayers' 1976 net operating loss and the following declaration:
ELECTION
In accordance with regulation section 7.0(d) taxpayer
elects or has previously elected to forgo the carry
back period of the 1976 net operating loss deduction.
Id. at 833. On these facts, the Court concluded in Young that
the taxpayers neither literally nor substantially complied with
the election requirements of the regulations at section 7.0(d),
Temporary Income Tax Regs., 42 Fed. Reg. 1470 (Jan 7, 1977).
Young v. Commissioner, supra at 836.
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