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(addressing the predecessor to section 172). Section 1398,
however, provides explicitly a clear exception to this general
rule. See sec. 1398(g), (i), (j). We are unpersuaded by the
cases cited that we should deviate from what we perceive is the
intent, purpose, and meaning of the statute. Mr. Lassiter is the
taxpayer who sustained the NOLs, and he seeks to use those NOLs
on his final income tax return. In contrast to respondent, we
read no requirement in the statute that those NOLs be “vested” at
the time of Mr. Lassiter’s death in order for him to do so. Our
reading furthers the purpose of section 172 “to ameliorate the
unduly drastic consequences of taxing income strictly on an
annual basis”, United States v. Foster Lumber Co., 429 U.S. at 42
(citation and quotation marks omitted), and is consistent with
the purpose of section 1398(i) (a statutory exception to the rule
that only the entity that incurs the loss may use the loss).
We conclude that petitioners may use the disputed NOLs on
their 1994 joint return. On the basis of this conclusion, we
consider it unnecessary to, and do not, consider petitioners’
alternative argument that section 6013 produces the same result.
Decision will be entered
under Rule 155.
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Last modified: May 25, 2011