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For 1991 through 1994, the taxable income or NOLs of Mr.
Lassiter, as debtor-in-possession of his bankruptcy estate, are
as follows:
Year Income/(NOL)
1991 ($59,106)
1992 506,922
1993 (2,631,896)
1994 (511,650)
Discussion
Petitioners argue that they may apply against their 1994
income the NOLs which passed to Mr. Lassiter from his bankruptcy
estate under section 1398(i). Respondent argues that the
Lassiters may not use any of those NOLs because the bankruptcy
estate terminated after Mr. Lassiter’s death. We agree with
petitioners.
We start our analysis by examining sections 172 and 1398,
the statutory provisions in issue. We begin first with section
172, which sets out in detail the procedures to be used in
computing the amounts allowable as NOLs and in determining the
years to which an NOL may be carried. So far as is relevant,
section 172(b)(1) provides:
SEC. 172(b). Net Operating Loss Carrybacks and
Carryovers.–-
(1) Years to which loss may be carried.–-
(A) General rule.-–Except as otherwise
provided in this paragraph, a net operating
loss for any taxable year–-
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