- 10 -
Johnston reported a net operating loss of $972,899, based on his
share of GSD’s accrued interest deduction for 1991.
On his 1992 return, petitioner reported a net operating loss
of $44,896 from his Schedule C, Profit or Loss From Business,
real estate consulting business (the 1992 NOL). As a result, he
could not make use of an NOL in 1992.
Petitioner carried forward half of the 1991 NOL to his 1993
return. On their 1994 return, petitioners carried forward the
portion of the 1991 NOL that petitioner did not use in 1993.
Petitioner (and petitioners) reported adjusted gross
income/(loss), net operating losses, and tax liability for 1991
to 1994 as follows:
NOL reported Tax
Year AGI reported on return on return liability
1991 ($1,012,064) ($1,017,764) -0-
1992 (552,706) (504,854) -0-
1993 (443,041) (549,750) $1,408
1994 (205,631) (444,641) 1,630
Paula Gulley did not claim any of the net operating loss
carryover for 1993.
OPINION
Petitioner owned a 66.67-percent general partnership
interest in the GSD limited partnership (GSD) on July 11, 1991.
On that date, petitioner filed a petition in bankruptcy, which
petitioners contend caused GSD’s tax year to end. GSD filed a
return it designated as its final tax return on July 15, 1992,
for the period January 1 to July 11, 1991. GSD had a loss of
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