Ann M. Lassiter and Estate of Henry A. Lassiter - Page 6




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                              (i) shall be a net operating                            
                         loss carryback to each of the 3                              
                         taxable years preceding the taxable                          
                         year of such loss, and                                       
                              (ii) shall be a net operating                           
                         loss carryover to each of the 15                             
                         taxable years following the taxable                          
                         year of the loss.                                            
               Under a plain reading of section 172(b)(1)(A)(i), a taxpayer           
          such as Mr. Lassiter must first apply an NOL loss to his third              
          taxable year preceding the loss, then apply any remaining portion           
          of that loss to his second taxable year preceding the loss, and             
          then apply any portion of the loss that still remains to his                
          taxable year immediately preceding the loss.  If the NOL is not             
          fully absorbed in those 3 carryback years, or if the taxpayer               
          elects under section 172(b)(3) to waive the carryback of the NOL,           
          section 172(b)(1)(A)(ii) mandates that the unabsorbed NOL be                
          carried forward to, and applied in, the first taxable year                  
          postdating the loss.  Section 172(b)(1)(A)(ii) further mandates             
          that this carryover procedure follow for each of the next 14                
          years until the NOL is applied in full.  With the exception of              
          section 172(b)(3), and certain other specialized rules set forth            
          in section 172(b), none of which are applicable here, the statute           
          does not provide explicitly any rule that would allow a taxpayer            
          to decline to apply an NOL in the year which is next in line                
          under the statutory scheme.  As the U.S. Supreme Court has                  
          observed with respect to the purpose of this statute:                       






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