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$1,459,349 for that period and allocated $972,899 of that loss to
petitioner.
Petitioners contend that they may carry half of the 1991 NOL
forward to 1993 and 1994 under any of several theories: (1) The
1991 NOL passed through GSD to its general partner (petitioner)
on July 11, 1991, when (according to petitioners) GSD terminated;
(2) GSD’s tax year closed as to petitioner under section
706(c)(2) on July 11, 1991, causing the partnership’s tax items,
such as the accrued interest on the Sunbelt note, to pass through
to petitioner on that date; (3) GSD’s 1991 partnership loss for
the period January 1 to July 11, 1991, should be prorated to
petitioner under section 706(d); and (4) petitioner’s interest in
GSD reverts to him because the bankruptcy trustee abandoned the
partnership interest under 11 U.S.C. section 554. Petitioners
also contend that petitioner’s share of the 1991 NOL was not
extinguished by the amount of cancellation of indebtedness income
excluded from gross income under section 108.
A. Whether the GSD Partnership Terminated on July 11, 1991
1. Whether GSD Terminated on July 11, 1991, Under Section
708(b)(1)(A)
Petitioners contend that GSD terminated on July 11, 1991,
when petitioner filed his petition in bankruptcy. Petitioners
also argue that GSD terminated because it carried on no business
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