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Petitioner Michael H. Gulley (petitioner) owned a 66.67-
percent general interest in the GSD limited partnership (GSD) in
1991. On July 11, 1991, petitioner filed a petition in
bankruptcy, which petitioners contend caused GSD’s tax year to
end. GSD filed its final tax return on July 15, 1991, for the
period January 1 to July 11, 1991. GSD had a loss of $1,459,349
for that period. Petitioner’s distributive share of that loss
was $972,899, causing a net operating loss (NOL) for 1991.
After concessions, the sole issue for decision is whether
petitioner for 1993 and petitioners for 1994 may carry forward an
NOL from 1991. Resolution of this issue depends on our
resolution of the following issues:
1. Whether, under section 708(b)(1)(A) or (B), GSD
terminated on July 11, 1991, as petitioners contend, so that
GSD’s loss for the period in 1991 before petitioner filed his
petition in bankruptcy is allocated to petitioner and not his
bankruptcy estate, or in 1992, as respondent contends. We hold
that GSD terminated in 1992.
2. Whether, as petitioners contend, under section
706(c)(2)(A), GSD’s tax year closed as to petitioner on July 11,
1991, causing GSD’s tax items, such as the interest on the
Sunbelt note that accrued from January 1 to July 11, 1991, to be
allocated to petitioner, rather than to his bankruptcy estate.
We hold that it did not.
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