Michael H. Gulley and Paula M. Gulley - Page 19




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          108 because the reduction of tax attributes under section                      
          108(b)(1) is determined by the bankruptcy estate, not the                      
          individual debtor.  See sec. 108(d)(8).  We disagree that the                  
          1991 NOL was a tax attribute of petitioner.                                    
               Petitioner’s interest in GSD passed to the bankruptcy estate              
          of petitioner on July 11, 1991, when he filed the bankruptcy                   
          petition.  The 1991 NOL was thus a tax attribute belonging to,                 
          and usable by, the bankruptcy estate, and it remained in the                   
          estate until petitioner was discharged from bankruptcy and the                 
          estate was terminated.  See sec. 1398(i).  The fact that                       
          petitioner did not elect a short taxable year under section                    
          1398(d)(2) does not entitle him to the NOL as his tax attribute.               
          See Kahle v. Commissioner, T.C. Memo. 1997-91 (taxpayer could not              
          use NOL carryforward in the taxable year in which he filed a                   
          petition in bankruptcy because he did not elect a short taxable                
          year under section 1398(d)(2); NOL carryforward from prior year                
          passed to bankruptcy estate upon the filing of the petition).                  
          Petitioner succeeded only to the unused portion, if any, of the                
          1991 NOL when his bankruptcy case closed in August 1993.  See                  
          sec. 1398(i).  Any amount excluded from gross income under                     
          section 108(a) is applied to reduce the tax attributes, such as                
          NOL’s, of the taxpayer.  See sec. 108(b)(1).  Thus, section                    
          108(b) requires that the 1991 NOL be reduced by the amount of                  
          discharge of indebtedness income excluded from income under                    






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