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Discussion
1. Net Operating Loss Carryover From 1988 Taxable Year
A. Section 172
In general, section 172 allows a deduction for an amount
equal to the aggregate of the net operating loss carryover to a
taxable year plus the net operating loss carryback to that year.
Sec. 172(a). Section 172(b), as in effect for the year in issue,
required that a net operating loss first be carried back to each
of the 3 previous taxable years and, if unabsorbed by those
years, that the remaining portion be carried forward to the 15
following taxable years. 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
the loss to the taxable years following the loss year. That
section further provides that:
Such election shall be made in such manner as may be
prescribed by the Secretary, and shall be made by the
due date (including extensions of time) for filing the
taxpayer's return for the taxable year of the net
operating loss for which the election is to be in
effect. Such election, once made for any taxable year,
shall be irrevocable for such taxable year.
Respondent contends that petitioner is precluded from
claiming a net operating loss carryover from taxable year 1987 or
1988 because petitioner has not filed an election as required
under section 172(b)(3) to waive the 3-year carryback period.
Petitioner did not file an election under section 172(b)(3) which
would permit the carry forward of any unabsorbed net operating
losses to the taxable year 1993. If the election under section
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