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172(b)(3) is not made, section 172(b)(2) provides that a
carryover is allowable only to the extent that the loss exceeds
the taxable income for the years of a carryback, regardless of
whether a carryback was in fact claimed. Lone Manor Farms, Inc.
v. Commissioner, 61 T.C. 436, 441-442 (1974), affd. without
published opinion 510 F.2d 970 (3d Cir. 1975); sec. 1.172-4(b)(1)
and (2), Income Tax Regs.
Since petitioner did not make an election under section
172(b)(3) to carry over his net operating losses to subsequent
tax years, the net operating loss claimed for 1987 would have to
be carried back to taxable year 1984 before carrying any unused
portion of the net operating loss forward. Also, the net
operating loss claimed for 1988 would have to be carried back to
taxable year 1985 before carrying any unused portion of the net
operating loss forward.
In the instant case, there is no evidence that the 1987 or
1988 net operating loss would not have been absorbed through the
operation of the 3-year carryback. We agree with respondent and
conclude that petitioner is not entitled to the claimed net
operating loss carryover.
B. Section 1398
Section 1398 applies to any case under chapter 7 or 11 of
title 11 of the United States Code in which the debtor is an
individual. Sec. 1398(a). Since petitioner is a debtor in a
chapter 7 bankruptcy proceeding, section 1398 applies in the
instant case.
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